Bajaj Auto, 1Q FY 2014

1QFY2014 Result Update | Automobile
July 22, 2013
Bajaj Auto
Performance Highlights
Y/E March (` cr) Net Sales EBITDA EBITDA Margin (%) Adj. EBITDA Margin* (%) Net profit Adj. net profit* 1QFY14 4,911 907 18.5 20.4 738 834 1QFY13 4,866 872 17.9 17.9 718 718 % chg (yoy) 0.9 4.0 55bp 250bp 2.7 16.0 4QFY13 4,746 837 17.6 17.6 766 766 % chg (qoq) 3.5 8.4 84bp 279bp (3.7) 8.9
ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Automobile 57,459 (4,589) 0.7 2,229/1,520 31,256 10 20,159 6,032 BAJA.BO BJAUT@IN
`1,986 `2,102
12 Months
Source: Company, Angel Research; Note: * after adjusting for a notional forex loss of `96cr
Bajaj Autos (BJAUT) 1QFY2014 results were broadly in line with our expectations, driven by a 9.7% yoy (18% qoq) growth in exports revenue, which was aided by a robust growth in exports realization. The results exceeded expectations by a wide margin after adjusting for a notional loss of `96cr (to be reversed over the tenure of the contract) related to range forward option contracts. While volume growth in the domestic and export markets is expected to remain under pressure in 2QFY2014 due to slowdown in demand, we expect a gradual revival in domestic demand from 3QFY2014 driven by better monsoons and opening up of three-wheeler (3W) permits in Hyderabad and Maharashtra. Additionally, the company is expected to benefit from the INR depreciation against the USD which will aid EBITDA margin expansion in our view. While the company realized `55.56/ USD in 1QFY2014 (`49.7/ USD in FY2013), the forward hedges for the remaining nine months of FY2014 are in the range of `55-`64/ USD. We broadly retain our earnings estimates for the company for FY2014/15 and maintain our Accumulate rating on the stock. Exports drive 1QFY2014 performance: For 1QFY2014, the top-line grew by 0.9% yoy (3.5% qoq) to `4,911cr, driven by a strong growth of 12.4% yoy (3.6% qoq) in net average realization which was primarily on the back of favorable rates on the forex hedges. While exports revenue in USD terms declined by ~3% yoy; INR depreciation versus the USD led to a strong growth of 9.7% yoy (18% qoq) in INR terms. EBITDA margins improved 55bp yoy (84bp qoq) to 18.5%, in-line with our estimate of 18.4%. Margin expansion was primarily driven by better realization on the exports front. While raw-material expenditure as a percentage of sales declined 273bp yoy (245bp qoq), other expenditure as a percentage of sales surged 170bp yoy (140bp qoq) due to a notional loss of `96cr related to outstanding forward rate options. Adjusted for the notional loss, the EBITDA margin exceeded expectations and came in at 20.4%. Net profit stood at `738cr (up 2.7% yoy) and was broadly in-line with our estimate of `726cr. Outlook and valuation: At `1,986, BJAUT is trading at 14.2x FY2015E earnings. We maintain our Accumulate rating on the stock with a target price of `2,102, valuing the company at 15x FY2015E earnings.
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 50.0 16.2 17.8 16.0
Abs. (%) Sensex Bajaj Auto
3m 5.2 12.7
1yr 17.5 24.8
3yr 11.3 59.5
Key financials (Standalone)

Y/E March (` cr) Net Sales % chg Net Profit % chg EBITDA (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research
FY2012 19,529 19.1 3,138 20.0 19.0 108.4 18.3 9.5 57.3 59.5 2.6 13.7
FY2013 19,997 2.4 3,044 (3.0) 18.2 105.2 18.9 7.3 43.7 46.9 2.5 13.9
FY2014E 21,696 8.5 3,451 13.4 19.2 119.3 16.6 5.8 38.9 42.9 2.2 11.6
FY2015E 25,239 16.3 4,056 17.5 19.3 140.2 14.2 4.6 36.5 40.4 1.8 9.5
Yaresh Kothari
022-3935 7800 Ext: 6844 yareshb.kothari@angelbroking.com
Please refer to important disclosures at the end of this report
Bajaj Auto | 1QFY2014 Result Update
Exhibit 1: Quarterly financial performance (Standalone)

Y/E March (` cr) Net sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Purchases of TG (% of Sales) Other expenses (% of Sales) Total expenditure Operating profit OPM (%) Adj. OPM (%)* Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT Adjusted PAT* Adj. PATM Equity capital (cr) Reported EPS (`) Adjusted EPS* (`) 1QFY14 4,911 3,204 65.2 184 3.7 203 4.1 414 8.4 4,004 907 18.5 20.4 0 44 176 1,038 0 1,038 21.1 300 28.9 738 834 17.0 289.4 25.5 28.8 1QFY13 4,866 3,316 68.2 160 3.3 192 3.9 326 6.7 3,994 872 17.9 17.9 0 35 182 1,018 0 1,018 20.9 300 29.5 718 718 14.8 289.4 24.8 24.8 2.7 16.0 2.7 16.0 0.0 26.0 (3.5) 1.9 1.9 0.3 4.0 27.2 5.9 14.5 % chg (yoy) 0.9 (3.4) 4QFY13 4,746 3,160 66.6 167 3.5 249 5.2 334 7.0 3,910 837 17.6 17.6 0 47 244 1,033 0 1,033 21.8 268 25.9 766 766 16.1 289.4 26.5 26.5 (3.7) 8.9 (3.7) 8.9 12.1 (4.8) (27.9) 0.4 0.4 2.4 8.4 23.8 (18.5) 10.2 % chg (qoq) 3.5 1.4 FY2013 19,997 13,548 67.7 639 3.2 859 4.3 1,316 6.6 16,362 3,635 18.2 18.2 1 164 795 4,266 0 4,266 21.3 1,223 28.7 3,044 3,044 15.2 289.4 105.2 105.2 FY2012 19,529 13,351 68.4 540 2.8 751 3.8 1,166 6.0 15,809 3,720 19.0 19.0 22 146 608 4,160 134 4,026 20.6 1,022 25.4 3,004 3,138 15.4 289.4 103.8 108.4 1.3 (3.0) 1.3 (3.0) 19.6 12.6 30.8 2.5 6.0 3.5 (2.3) 12.8 14.3 18.4 % chg (yoy) 2.4 1.5
Source: Company, Angel Research; Note: * after adjusting for a notional forex loss of `96cr
Exhibit 2: 1QFY2014 Actual vs Angel estimates

Y/E March (` cr) Net Sales EBITDA EBITDA margin (%) Adj. EBITDA margin (%) Reported PAT Adjusted PAT
Actual 4,911 907 17.6 20.4 738 834
Estimates 4,792 883 18.6 18.4 726 726
Variation (%) 2.5 2.6 (97)bp 198bp 1.6 14.9
July 22, 2013
Exhibit 3: Quarterly volume performance

(units) Domestic Exports Total volumes Motorcycles Domestic Exports Total motorcycles % of total volumes Three-wheelers Domestic Exports Total threewheelers % of total volumes 45,057 74,067 119,124 12.2 44,837 51,511 96,348 8.9 0.5 43.8 23.6 60,090 61,468 121,558 12.4 (25.0) 20.5 (2.0) 226,142 253,926 480,068 11.3 202,979 312,176 515,155 11.8 11.4 (18.7) (6.8) 571,655 288,496 860,151 87.8 618,489 364,134 982,623 91.1 (7.6) (20.8) (12.5) 556,147 303,537 859,684 87.6 2.8 (5.0) 0.1 2,463,863 1,293,231 3,757,094 88.7 2,566,757 1,267,648 3,834,405 88.2 (4.0) 2.0 (2.0) 1QFY14 616,712 362,563 979,275 1QFY13 663,326 415,645 1,078,971 % chg (yoy) (7.0) (12.8) (9.2) 4QFY13 616,237 365,005 981,242 % chg (qoq) 0.1 (0.7) (0.2) FY2013 2,690,005 1,547,157 4,237,162 FY2012 2,769,736 1,579,824 4,349,560 % chg (yoy) (2.9) (2.1) (2.6)
Strong growth in export realization drives top-line: For 1QFY2014, the top-line grew by 0.9% yoy (3.5% qoq) to `4,911cr led by a better-than-expected growth of 12.4% yoy (3.6% qoq) in net average realization. The net average realization grew on the back of favorable rates on the forex hedges (the company realized `55.56/ USD in 1QFY2014 as against `49.7/ USD in FY2013) and also due to price hikes taken since 1HFY2013. While exports revenue in USD terms declined by 3% yoy; INR depreciation versus the USD led to a strong growth of 9.7% yoy (18% qoq) in INR terms. The growth in exports revenue was led by an impressive growth of 25.8% yoy (18.8% qoq) in net average realization inspite of the volumes having posted a decline of 12.8% yoy (flat qoq). Domestic revenues on the other hand reported a decline of 2.4% yoy (4.2% qoq) led by a 7% yoy (flat qoq) decline in volumes. Total volumes declined by 9.2% yoy (flat qoq) on account of slowdown in domestic motorcycle demand. During the quarter, motorcycle volumes in the domestic and export markets declined by 7.6% (up 2.8% qoq) and 20.8% yoy (5% qoq) respectively. The strike at the Chakan plant impacted motorcycle volumes (loss of ~20,000 units) to some extent. However, three-wheeler volumes registered a strong growth of 23.6% yoy (down 2% qoq) driven largely by the exports which grew by 43.8% yoy (20.5% qoq).
July 22, 2013
Exhibit 4: Volume declines due to demand slowdown

(units) 1,200,000 1,150,000 1,100,000 1,050,000
17.7
Exhibit 5: Exports aid net average realization growth

(`) 50,000 48,000 46,000 44,000 42,000
41,502 42,859 45,004
Total volumes
16.3 13.6 7.3 (1.3)
yoy change (%)

4.9
(%) 20.0 15.0 10.0 5.0
Net average realisation
yoy change (%) 12.4
(%) 14.0 12.0 10.0
7.1 5.8 3.1 2.6 3.3

44,393 43,686 45,911
6.8 4.6
47,060 47,400 49,105
1,092,815
1,164,137
1,075,441
1,017,167
1,078,971
1,049,208
1,127,741
1,000,000 950,000 900,000 850,000
(3.5)
(9.2)
0.0 (5.0) (10.0) (15.0)
5.3
8.0 6.0 4.0 2.0 0.0
981,242
979,275
(9.9)
40,000 38,000 36,000
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
42.3
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
Exhibit 6: Revenue mix

(%) 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0
Domestic Export
Exhibit 7: Domestic market share trend

(%) 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Three-wheelers 39.9 26.9 38.9 Motorcycles 40.9 40.3 41.0 Total Two-wheelers 44.1 41.5
37.2
34.7
35.3
29.3
36.3
34.6
32.9
34.2
39.0
38.3 25.3
25.2
24.5
23.5
25.7
26.0
1QFY14
22.5 22.6 16.3 16.4
62.8
65.3
64.7
70.7
63.7
65.4
67.1
65.8
61.0
19.6
20.2
18.9
17.9
17.6
18.5
19.1
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
Source: Company, SIAM, Angel Research
EBITDA margin at 18.5%: On the operating front, EBITDA margins improved 55bp yoy (84bp qoq) to 18.5% which was in-line with our estimate of 18.4%. Margin expansion was primarily driven by better realization on the exports front (average export realization of `55.56 as against `49.5 in 4QFY2013). While raw-material expenditure as a percentage of sales declined 273bp yoy (245bp qoq), other expenditure as a percentage of sales surged 170bp yoy (140bp qoq) due to a notional loss of `96cr (to be reversed over the tenure of the contract) related to outstanding forward rate options. However, adjusted for the notional loss, the EBITDA margin exceeded expectations and came in at 20.4%. Operating profit for the quarter grew 4% yoy (8.4% qoq) to `907cr.
July 22, 2013
1QFY14
Exhibit 8: EBITDA margin recovers to 18.5%

(%) 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 17.8 18.8 19.7 19.8 17.9 18.4 18.7 17.6 18.5 76.4 75.4 73.6 73.4 74.4 74.1 73.9 73.3 70.8
EBITDA margin Raw material cost/sales
Exhibit 9: Reported net profit in-line with estimates

( ` cr) 840 820 800 780 760 740 720 700 680 660 640
Net profit (LHS) Net profit margin (RHS)
16.6 15.9 15.1 14.0 14.8 14.9 15.1 16.1 15.0
(%) 17.0 16.5 16.0 15.5 15.0 14.5 14.0 13.5
711
726
795
772
718
741
819
766
738
13.0 12.5
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
Reported net profit in-line with estimates: Net profit for the quarter stood at `738cr (up 2.7% yoy) and was broadly in-line with our estimate of `726cr. Adjusting for the notional MTM loss of `96cr, net profit surged 16% yoy (8.9% qoq) to `834cr.
July 22, 2013
1QFY14
Conference call Key highlights

The Management expects motorcycle demand to remain subdued in 2QFY2014 and expects the industry volumes to decline by 2-3% yoy. However, the Management is hopeful of demand revival in 2HFY2014 due to better monsoon. On the three-wheeler front, the Managements outlook remains positive with new permits opening up in Hyderabad (~20,000) and Maharashtra (~30,000). The company is targeting to maintain a domestic three-wheeler run-rate in excess of 20,000 units/ month. On the exports front, volumes in Egypt have been impacted because of the political unrest prevailing in the country. Monthly exports to Egypt currently stand at 7,000 units of three-wheelers and 6,000 units of two-wheelers. Demand in Nigeria has been affected post the ban on use of motorcycles as taxis. While industry volumes in Nigeria declined by 22% in 1QFY2014, the companys volume declined by 12%. However, according to the company, slowdown in Nigeria was offset by growth in Kenya and Uganda. The company is trying to further expand its presence in Africa and is targeting to enter newer regions like Kenya, Ivory Coast and Tanzania. According to the Management, the Sri Lankan market has bottomed out and it expects improvement from here on. The current monthly run-rate in Sri Lanka is of 6,000 units of two-wheelers and 3,000 units of three-wheelers. According to the Management, dealer inventory for Pulsar stands at ~21 days due to the strike at the Chakan plant; Discover, however, has an inventory of ~5 weeks. The Management indicated that there has been no impact of the Chakan strike on Pulsar sales at the retail level, as the dealers had sufficient inventory. The company however had a production loss of ~ 20,000 units due to the strike in 1QFY2014. The company stated that the loss in production in 2QFY2014 has been largely made up after the production shifted to Waluj. The company would be launching new variants of the Discover around the festival season and expects to gain 1-2% of market share. For FY2014, the company expects export volumes to increase by ~5%. However, long term growth in the export markets is expected to remain in the range of 15-18%. This would be led by leveraging upon its association with Kawasaki (to enter the South East Asian markets) and KTM. The company also intends to enter newer countries like Brazil going ahead. On the capacity front, the Management is planning to increase the three-wheeler capacity in FY2014 to 60,000 units/ month from the current level of 50,000 units/ month. The net average USD/INR rate for exports realization stood at `55.56 in 1QFY2014 as against `49.5 in 4QFY2013. The company expects exports realization to be at `58.5 and `59 per USD in 2FY2014 and 3QFY2014 respectively. BJAUT has outstanding hedges of about US$740mn in the range of `55-`64/ USD. BJAUT plans to spend `400cr in capex over the next two years.
July 22, 2013
Investment arguments
Strong focus on Discover and Pulsar to improve market share: BJAUT has witnessed moderation in demand in the domestic market recently due to increased competitive activity and slowdown in the industry. However, BJAUT continues to focus on its core brands, Discover and Pulsar. The successful launches of Discover 100T, 125ST and Pulsar 200NS in FY2013 enabled the company to arrest its market share losses. BJAUT lost ~100bp in market share in the domestic motorcycle segment; its share now stands at 24.4%. Going ahead, the company intends to launch six new variants of Discover in FY2014, four of which would be in the mass market category. We believe the new launches will enable the company to regain momentum in the domestic markets and will lead to a volume CAGR of 8-10% over FY2013-15E. Three-wheelers registering healthy growth: BJAUT has a strong presence in the three-wheeler market, with an overall market share (including exports) of ~57%. The company tops the passenger auto-rickshaw segment (~65% market share), which accounts for ~85% of the three-wheeler market. The three-wheeler segment fetches higher margins than the companys two-wheeler business. Although competition in the domestic three-wheeler space is intense, strong export volume growth has helped BJAUT to post an ~15% volume CAGR over FY2009-13. Going ahead, the company plans to revamp its entire three-wheeler portfolio in FY2014 which should help the company sustain growth. Growth potential in export markets: BJAUT registered a strong exports CAGR of ~20% during FY2009-13, aided by an ~20% CAGR in two-wheeler exports and an ~16% CAGR in three-wheeler exports. While in FY2013, the exports growth has remained muted due to import duty hike in Sri Lanka and disruptions in Egypt, we expect volumes to recover in 2HFY2014. We estimate the company to register an 8-10% volume CAGR in exports over FY2013-15E. Further, favorable currency movement is likely to boost export revenues in FY2014. BJAUT has hedged around two-third of its FY2014 exports at a favorable USD-INR rate of `55 and above (export realization for FY2013 stood at `49.7/ USD).
Outlook and valuation

We broadly retain our earnings estimates for the company for FY2014/15. While volume growth in the domestic and export markets is expected to remain under pressure in 2QFY2014 due to slowdown in demand, we expect a gradual revival in domestic demand from 3QFY2014 driven by better monsoons and opening up of three-wheeler (3W) permits in Hyderabad and Maharashtra. Additionally, the company is expected to benefit from the INR depreciation against the USD which will aid EBITDA margin expansion in our view. While the company realized `55.56/ USD in 1QFY2014 (`49.7/ USD in FY2013), the forward hedges for the remaining nine months of FY2014 are in the range of `55-`64/ USD.
July 22, 2013
Exhibit 10: Change in estimates

Y/E March Net Sales (` cr) OPM (%) EPS (`) Earlier Estimates 23,005 18.0 118.8 26,460 18.5 139.7 Revised Estimates 21,696 19.2 119.3 25,239 19.3 140.2 % chg (5.7) 121bp 0.4 (4.6) 77bp 0.3 FY2014E FY2015E FY2014E FY2015E FY2014E FY2015E
At `1,986, BJAUT is trading at 14.2x FY2015E earnings. We maintain our Accumulate rating on the stock with a target price of `2,102, valuing the company at 15x FY2015E earnings.
Exhibit 11: Key assumptions - Volumes

Y/E March (` cr) Total motorcycles Domestic < 125cc >125cc Exports < 125cc >125cc Total three-wheelers Passenger Goods Exports Total scooters Total volumes % chg
FY2010 2,506,865 1,781,768 928,882 852,886 725,097 533,126 191,971 340,959 164,502 11,548 164,909 4,852 2,852,676 30.0
FY2011 3,387,043 2,414,606 1,159,190 1,255,416 972,437 639,463 332,974 436,884 201,246 4,357 231,281 27 3,823,954 34.0
FY2012 3,834,405 2,566,757 1,128,410 1,438,347 1,267,648 832,428 435,220 515,155 195,141 7,838 312,176 4,349,560 13.7
FY2013 3,757,094 2,463,863 1,244,938 1,218,925 1,293,231 811,668 481,563 480,057 223,287 2,844 253,926 4,237,151 (2.6)
FY2014E 3,874,409 2,539,080 1,344,533 1,194,547 1,335,329 844,135 491,194 527,888 234,451 1,422 292,015 4,402,297 3.9
FY2015E 4,338,459 2,852,715 1,478,986 1,373,728 1,485,745 945,431 540,314 574,724 246,174 1,493 327,057 4,913,183 11.6
Exhibit 12: Angel vs consensus forecast

Angel estimates FY14E Total op. income (` cr) EPS (`) 21,696 119.3 FY15E 25,239 140.2 Consensus FY14E 22,358 121.5 FY15E 25,468 138.6 Variation (%) FY14E (3.0) (1.8) FY15E (0.9) 1.1
Source: Bloomberg, Angel Research
July 22, 2013
Exhibit 13: One-year forward P/E band

(` ) 2,500 2,000 1,500 1,000 500 0 Share Price (`) 6x 10x 14x 18x
Exhibit 14: One-year forward P/E chart

(x) 60.0 Absolute P/E Five-yr average P/E
BJAUT de-merged
50.0 40.0 30.0 20.0 10.0 0.0
Dec-07
Jan-07
Aug-09
Aug-10
Aug-11
Mar-05
Nov-08
Aug-12 Jan-13
Apr-04
Feb-06
Oct-03
Oct-04
Oct-05
Oct-09
Sep-10
Sep-11
Sep-06
Sep-07
Sep-08
Jul-12
Jul-13
Exhibit 15: BJAUT Premium/Discount to Sensex P/E

(%) 250 200 150 100 50 0 (50) (100) Absolute premium Five-yr average premium
Exhibit 16: Two-wheeler cos stock performance vs Sensex

700 600 500 400 300 200 100 0 TVSL HMCL BJAUT Sensex
Aug-09
Mar-08
Mar-09
Aug-10
Feb-06
Feb-10
Sep-08
Sep-10
Sep-11
Feb-11
Jan-12
Jul-13
Jul-11
Jul-12
Dec-07
Jan-07
Mar-05
Nov-08
Aug-12
Apr-04
Oct-09
Exhibit 17: Automobile - Recommendation summary

Company Ashok Leyland Bajaj Auto Hero MotoCorp Maruti Suzuki Mahindra & Mahindra Tata Motors TVS Motor Reco. Buy Accumulate Neutral Buy Buy Buy Accumulate CMP Tgt. price (`) (`) 15 1,986 1,788 1,450 902 298 33 22 2,102 1,820 1,822 1,103 347 35 Upside (%) 49.6 5.9 1.7 25.7 22.3 16.6 6.1 P/E (x) FY14E 39.1 16.6 16.2 13.6 14.2 8.2 6.6 FY15E 8.0 14.2 12.8 11.9 12.7 7.2 5.7 EV/EBITDA (x) FY14E 6.1 11.6 8.4 6.6 7.6 4.0 2.2 FY15E 3.7 9.5 7.6 5.6 6.3 3.4 1.6 RoE (%) FY14E 2.3 38.9 39.8 16.1 23.3 24.6 18.1 FY15E 11.0 36.5 40.7 15.8 21.9 23.2 18.5 FY13-15E EPS CAGR (%) 74.4 15.4 14.9 23.8 14.1 13.8 15.3
Company background
Bajaj Auto (BJAUT) is the second largest 2W manufacturer in the country (~25% market share) and a market leader in the 3W segment (~55% market share). BJAUT has three manufacturing facilities in India, located at Waluj, Chakan and Pantnagar, with a total installed capacity (2W - 4.8mn and 3W - 0.6mn) of 5.4mn units. BJAUT also happens to be one of India's largest auto exporters, with exports forming ~35% of revenue in FY2013. The two dominant brands, Discover and Pulsar account for ~65% of the companys motorcycle volumes.
July 22, 2013
Jul-13
Jul-13
Profit and loss statement (Standalone)

Y/E March (` cr) Total operating income % chg Total expenditure Net raw material costs Other mfg costs Employee expenses Other EBITDA % chg (% of total op. income) Depreciation & amortization EBIT % chg (% of total op. income) Interest and other charges Other income Recurring PBT % chg Extraordinary income/(exp.) Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of total op. income) Basic EPS (`) Adj. EPS (`) % chg FY2010 FY2011 FY2012 11,921 35.3 9,332 8,070 214 399 648 2,589 118.1 21.7 136 2,453 132.0 20.6 6 123 2,569 121.8 (162) 705 29.3 1,703 1,864 116.9 15.6 64.4 64.4 116.9 16,398 37.6 13,227 11,798 253 477 700 3,171 22.5 19.3 123 3,048 24.3 18.6 2 577 3,623 41.0 725 1,008 23.2 3,340 2,615 40.3 15.9 90.4 90.4 40.3 19,529 19.1 15,809 14,103 327 540 839 3,720 17.3 19.0 146 3,574 17.3 18.3 22 608 4,160 14.8 (134) 1,022 25.4 3,004 3,138 20.0 16.1 108.4 108.4 20.0 FY2013 FY2014E FY2015E 19,997 2.4 16,362 14,407 382 639 934 3,635 (2.3) 18.2 164 3,471 (2.9) 17.4 1 795 4,266 2.5 1,223 28.7 3,044 3,044 (3.0) 15.2 105.2 105.2 (3.0) 21,696 8.5 17,521 15,424 406 711 980 4,175 14.8 19.2 181 3,994 15.0 18.4 1 868 4,861 13.9 1,410 29.0 3,451 3,451 13.4 15.9 119.3 119.3 13.4 25,239 16.3 20,372 17,944 485 830 1,113 4,867 16.6 19.3 200 4,667 16.9 18.5 1 1,046 5,712 17.5 1,657 29.0 4,056 4,056 17.5 16.1 140.2 140.2 17.5
July 22, 2013
10
Balance sheet statement (Standalone)

Y/E March (` cr) SOURCES OF FUNDS Equity share capital Reserves & surplus Shareholders funds Total loans Deferred tax liability Other long term liabilities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross block Less: Acc. depreciation Net Block Capital work-in-progress Investments Long term loans and adv. Other noncurrent assets Current assets Cash Loans & advances Other Current liabilities Net current assets Misc. exp. not written off Total Assets 3,379 1,900 1,480 42 4,022 1,584 100 797 686 2,858 (1,274) 4,269 3,395 1,912 1,483 70 4,722 227 402 2,344 229 992 1,123 3,698 (1,353) 5,550 3,396 1,914 1,482 42 4,883 601 1 4,076 1,654 1,025 1,397 4,628 (553) 6,456 3,829 2,024 1,804 294 6,430 462 1 3,487 559 1,312 1,616 4,134 (647) 8,345 4,363 2,205 2,158 59 7,910 462 1 4,154 1,354 1,223 1,577 4,472 (318) 10,273 4,686 2,405 2,281 36 9,860 462 1 5,224 1,359 1,722 2,143 5,059 165 12,806 145 2,784 2,928 1,339 2 4,269 289 4,621 4,910 292 30 194 125 5,550 289 5,752 6,041 97 48 157 112 6,456 289 7,613 7,902 71 115 122 135 8,345 289 9,541 9,830 71 115 122 135 10,273 289 12,073 12,363 71 115 122 135 12,806 FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E
Note: Cash and bank balance includes term deposits with banks
July 22, 2013
11
Cash flow statement (Standalone)

Y/E March (` cr) Profit before tax Depreciation Change in working capital Direct taxes paid Less: Others Cash Flow from Operations (Inc.)/Dec. in fixed assets (Inc.)/Dec. in investments Others Cash Flow from Investing Issue of equity Inc./(Dec.) in loans Dividend paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in cash Opening Cash balances Closing Cash balances FY2010 FY2011 FY2012 2,411 136 868 (700) 22 2,737 9 (2,068) (104) (2,164) (236) (317) (56) (609) (35) 137 100 4,348 123 (822) (974) (1,061) 1,614 (161) (608) 147 (623) 145 (578) (429) (862) 129 100 229 4,026 146 332 (1,148) (162) 3,193 (338) (94) (250) (682) (158) (1,154) (252) (1,564) 947 229 1,176 FY2013 4,266 164 (521) (1,239) (535) 2,134 (488) (1,353) 563 (1,278) (1,300) (179) (1,479) (622) 1,176 553 FY2014E 4,861 181 471 (1,410) 4,103 (300) (1,480) (1,780) (1,523) (1,523) 801 553 1,354 FY2015E 5,712 200 (477) (1,657) 3,779 (300) (1,950) (2,250) (1,523) (1,523) 6 1,354 1,359
Note: Closing Cash balances excludes term deposits with banks
July 22, 2013
12
Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) WC cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Int.) (1.0) (1.1) (0.9) (1.5) (1.1) (1.7) 160.7 (0.9) (1.9) 6,428.3 (0.9) (2.2) 5,603.6 (0.9) (2.3) 6,548.2 3.5 12 9 46 (25) 4.8 11 7 46 (33) 5.8 11 7 43 (35) 5.5 12 11 44 (31) 5.3 12 11 44 (24) 5.6 12 11 44 (21) 63.6 69.9 77.7 62.1 65.6 66.7 59.5 72.6 57.3 46.9 57.3 43.7 42.9 48.8 38.9 40.4 46.0 36.5 20.6 70.7 3.2 46.4 0.3 (1.0) 2.6 18.6 76.8 3.5 49.4 0.2 (0.9) 2.7 18.3 74.6 3.9 52.7 8.5 (1.1) 5.6 17.4 71.3 3.2 39.3 0.5 (0.9) 5.3 18.4 71.0 2.6 33.9 0.7 (0.9) 2.9 18.5 71.0 2.5 32.5 0.7 (0.9) 3.8 64.4 64.4 69.1 40.0 101.2 90.4 90.4 94.6 40.0 169.7 108.4 108.4 113.5 45.0 208.8 105.2 105.2 110.8 45.0 273.1 119.3 119.3 125.5 45.0 339.7 140.2 140.2 147.1 45.0 427.2 30.8 28.7 19.6 2.0 4.6 21.1 12.8 22.0 21.0 11.7 2.0 3.2 16.6 9.5 18.3 17.5 9.5 2.3 2.6 13.7 7.9 18.9 17.9 7.3 2.3 2.5 13.9 6.1 16.6 15.8 5.8 2.3 2.2 11.6 4.7 14.2 13.5 4.6 2.3 1.8 9.5 3.6 FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E
410.1 1,803.8
July 22, 2013
13
Research Team Tel: 022 - 39357800
E-mail: research@angelbroking.com
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered
Bajaj Auto No No No No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%) Reduce (-5% to -15%)
Accumulate (5% to 15%) Sell (< -15%)
Neutral (-5 to 5%)
July 22, 2013
14

Bajaj Auto, 1Q FY 2014

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Bajaj Auto, 1Q FY 2014

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1QFY2014 Result Update | Automobile

July 22, 2013

Abs. (%) Sensex Bajaj Auto

1yr 17.5 24.8

3yr 11.3 59.5

Key financials (Standalone)

Please refer to important disclosures at the end of this report