8 July 2020
Annual Report Update
| Sector:
Automobiles
Bajaj Auto
Neutral
BSE SENSEX
36,329
S&P CNX
10,706
CMP: INR2,853
TP: INR2,895 (+1%)
Financial strength to help navigate uncertain times
Premiumisation trend to continue
Motilal Oswal values your support in
the Asiamoney Brokers Poll 2020 for
India Research, Sales and Trading
team. We
request your ballot.
Bajaj Auto’s (BJAUT) FY20 annual report highlights the potential impact of COVID-19
on demand with weakness continuing at least till 1HFY21. The company expects the
Super-sports segment to grow in FY21.
Also, BJAUT expects the premiumization trend to continue in the long run. The
company is well positioned with its portfolio of
Husqvarna, KTM, Dominar, Pulsar
and the planned
Triumph
launch.
Its competitive positioning in both domestic motorcycles and 3Ws was broadly
stable in FY20, however, it lost share in 3W exports from India. Overall, share of
exports from Africa increased 6pp to 53%; however, the company witnessed a
similar decline in share from South Asia and the Middle East (ME).
In FY20, BJAUT started granting employee stock options (ESOPs). Interestingly,
BJAUT’s ESOP Trust would be buying stocks from the open market for giving shares
on exercise of ESOPs.
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
BJAUT IN
289
823.9 / 11.2
3315 / 1793
-4/4/8
1792
46.3
Outlook: 1HFY21 to be affected by Covid-19
Financials & Valuations (INR b)
FY20 FY21E FY22E
Y/E March
Sales
299
263 296
EBITDA
51.0 45.0 51.0
EBITDA Margin (%) 17.0 17.1 17.2
Adj. PAT
54.2 47.7 51.8
EPS (INR)
187
165 179
EPS Gr. (%)
13.3 -11.9
8.6
BV/Sh. (INR)
689
753 819
Ratios
RoE (%)
26.0 22.9 22.8
RoCE (%)
23.8 20.9 20.8
Payout (%)
77.0 54.6 57.0
Valuations
P/E (x)
15.2 17.3 15.9
P/BV (x)
4.1
3.8
3.5
Div. Yield (%)
4.2
2.6
3.0
FCF Yield (%)
4.3
5.4
6.0
With partial easing of the lockdown, BJAUT’s plants at Chakan, Waluj and
Pantnagar have opened, but are far from working at full pace. It expects
demand to remain affected for at least the first two, if not three, quarters of
FY21.
FY21 – supposed to be the year of BS-VI transition – has been rocked by the
COVID-19 pandemic and its impact on demand. The company sees a distinct
possibility of domestic demand remaining constrained, especially in the 100-
200cc segment.
However, the Super-sports segment (>250cc) may see growth due to
reasonably large number of relatively well-off people. BJAUT plans to launch
products in this segment in FY21.
It expects marketing to play a critical role in reviving motorcycle demand in
the COVID-19 and immediate post-COVID world. The key, according to BJAUT,
is how the story of desire is communicated to the segmented markets and
how manufacturers can buttress this story with exciting products, prices and
financial offers.
Extract from the annual report, “We
cannot say how Bajaj Auto will fare in this
unknown world. But we do know that Bajaj Auto has serious financial muscle
to fashion its path to growth.”
Premiumization to continue, BJAUT to have wide portfolio in this segment
Despite the weak FY20, the company expects the ‘Sports’ and ‘Super-sports’
segments to grow in the long run, driven by affluent customers under 40 years
in urban markets.
Jinesh Gandhi - Research analyst
(Jinesh@MotilalOswal.com)
Vipul Agrawal - Research analyst
(Vipul.Agrawal@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Bajaj Auto
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter 53.7
53.5
51.2
DII
8.8
10.1
7.4
FII
13.9
13.9
15.6
Others
23.6
22.5
25.8
FII Includes depository receipts
Stock Performance (1-year)
KTM
and Bajaj Auto have launched
Husqvarna
in FY20. The addition of the
Husqvarna
brand to
KTM
stores should significantly expand volumes in the
Super-sport segment.
With its upper-end
Pulsar, KTM, Dominar, Husqvarna
and the soon to be
launched
Triumph,
it expects to continue having a solid presence in these
segments.
Domestic motorcycle market share broadly stable
Overall, BJAUT’s domestic motorcycle market share declined 20bp to 18.5%.
Market share in <125cc segment improved by 20bp to 14.3%, driven by two new
models — the
Platina H
and the
Pulsar125.
Market share in the Premium segment (150-220cc) improved 60bp to 44.7%.
Market share in the Super-sport segment (KTM,
Dominar, and Husqvarna)
expanded 270bp to 10.1%, as BJAUT volumes grew 10.9% v/s industry decline of
18.5%.
KTM’s
volumes in India grew 26% (the only major 2W brand to attain
double-digit growth in FY20), driven by new products in 125cc and 790cc along
with the refreshed
Duke200
and
Duke390.
3W market share stable in India, attains leadership in diesel as well
Extract from the AR,
“We
cannot say how
Bajaj Auto will fare in
this unknown world.
But we do know that
Bajaj Auto has serious
financial muscle to
fashion its path to
growth. Enabled by our
financial power, if the
growth path becomes a
reality, it is quite
possible that demand
effects of COVID-19 may
be less overwhelming
than what these appear
today.”
Overall, BJAUT’s domestic passenger 3W market share declined 50bp to 63.8%,
with share of petrol/alt. fuel increasing by 200bp (to 88%).
Share of diesel 3Ws was up 300bp (to 40%), where the company attained
market leadership. Share of small diesel 3Ws was up 9pp to 89%.
In FY20, the
Qute-quadricycle
was launched in four states – Kerala, Gujarat,
Odisha and Rajasthan. In FY20, the company sold 942 units of
Qute
within India.
A partnership with Uber helped in selling 270
Qutes
in the Bengaluru market,
with over 150 such vehicles now running on the Uber platform.
Exports at record high; Decline in share of 3W exports from India
BJAUT’s motorcycle exports grew 10% to 1.87m and its share in exports from
India grew 40bp to 59.6%. Motorcycle exports grew in Africa, especially in
Nigeria, Ethiopia and Uganda, where it continues to grow by over 20%.
Motorcycle exports growth in the Middle East (ME) was driven by recovery in
Egypt and increasing penetration in newer markets like Iraq. Volumes were
stable in Latin America, as decline in Argentina (owing to economic turmoil) was
compensated by growth in Mexico and Central America. Exports to South Asia
faced headwinds, due to regulatory issues in Bangladesh while Sri Lanka
continued to decline.
3W exports declined 21.6% to 297k units, impacted entirely by the severe
permit restrictions in Egypt. BJAUT’s share of 3W exports from India declined by
770bp to 59.4%. New markets entered in the last five years continued to grow
handsomely. Philippines, Iraq and Cambodia are among its top-10 markets now,
each growing at over 20%.
BJAUT exports to 79 countries, ranking #1 or #2 in 22 countries. Market mix of
overall exports witnessed a change between Africa (+6pp to 53% of exports) and
South Asia/ME (-6bp to 22%), whereas LatAM (14%) and ASEAN (11%) were
stable.
8 July 2020
2
 Motilal Oswal Financial Services
Bajaj Auto
ESOP Trust to buy shares from market to give stock option to employees
The company has created an ESOP Trust to provide share-based payment to its
employees. The Trust would purchase shares of BJAUT from the open market
and give it to employees upon exercising of the ESOPs.
The company treats the Trust as an extension and shares held by the Trust are
deemed as treasury shares. Own re-acquired equity instruments (treasury
shares) are recognized at cost and deducted from other equity.
No gain or loss has been recognized in the Statement of Profit and Loss on the
purchase, sale, issue or cancellation of the company’s own equity instruments.
In FY20, the trust purchased shares worth INR260m as 287.6k options were
granted at an exercise price of INR2,942.65/share. As a result, the company
recognized INR100m as share-based payment expense in Employee cost.
New subs in Thailand to focus on ASEAN where BJAUT has weak presence
BJAUT has created a new subsidiary, Bajaj Auto Thailand (investment of
INR110m), to focus on ASEAN markets. This also included BJAUT’s first R&D
center outside India.
Focus of this subsidiary is to identify suitable business partners, gather key
market insights and manage as well as oversee business operations across the
ASEAN region. Thailand is an advanced motorcycle market – it defines as well as
leads trends in South East Asian markets.
The new design center marks the beginning of Bajaj’s R&D expanding its designs
to trend-defining markets around the globe.
Investment of INR715m in Yulu Bikes (bike-sharing platform)
BJAUT has made a strategic investment of INR715m in in Yulu Bikes, a
Bengaluru-based start-up. Yulu Bikes operates in the lithium-battery powered
electric 2W and bicycle space. It also owns a dock-less bike-sharing platform.
It is focused on sub-5km first-/last-mile connectivity. It expects the shared
micro-mobility segment to help reduce congestion and pollution. This coupled
with expansion of Mass Rapid Transport Systems like Metros in large cities
should further boost demand for flexible last-mile connectivity.
New product launches and R&D
e-Chetak:
BJAUT brought its historic brand back to life with the launch of the
next-generation
Chetak
in an electric avatar. The new
Chetak
is made at state-
of-the-art dust-free and temperature-controlled facility at Chakan to exacting
standards using the best materials and cutting-edge robotic technology.
Dominar250:
The
Dominar400
was priced higher due to its big displacement
engine and top-end features. Moreover, the high performance engine was
considered too powerful for less experienced riders. To broaden the brand’s
appeal, a new
Dominar250
was launched at competitive pricing.
In FY20, it invested INR4.75b in R&D (incl. capitalized R&D) – an increase of 4%
over FY19 and constituting 1.6% of revenues (v/s 1.5% in FY19).
The company has invested in creating a state-of-the-art electric vehicle (EV) test
facility in FY20. This new laboratory will be pivotal in its thrust into the EV space.
Every component and aggregate in the EV system can be tested for performance
and durability at the new facility.
8 July 2020
3
 Motilal Oswal Financial Services
Bajaj Auto
Financial highlights of FY20
Revenues declined 1.4% in FY20 to ~INR299.2b, impacted by 8% decline in
volumes but supported by 7% higher realizations due to mix. EBITDA declined
2% to INR51b. However, higher other income on treasury and lower tax rate due
to reduction in corporate tax rate boosted adj. PAT growth to 15% to INR51b.
FY20 EBITDA margins were stable YoY (at 17%) as revenues declined 1% but
gross margins improved 160bp to 29.8%. However, there was cost inflation in all
other cost head including staff cost (+11% YoY or 50bps), other variable cost
(+50bp), repair cost (+33% YoY) and miscellaneous expenses (+30% YoY).
Yield on treasury improved 200bp to 9.8% in FY20.
Core working capital improved by 2 days to -5 days with 10 days reduction in
debtor days offset by 7 days in payable days.
RoE in FY20 improved by 260bp to 26%, driven by lower tax rate and higher
dividend payment.
CFO from operations grew 55% to INR38.6b, driven by reduction in corporate
tax rate and reduction in working capital. While capex increased to INR2.8b
(from INR1.1b), overall capex intensity remains lowest in the listed 2W space.
FCFF grew 50% to INR35.8b.
Dividend payout increased to 82% of PAT (v/s 47% in FY19). However, this
increase might have one-off component driven by change in the tax treatment
of dividends. Hence, net cash on balance sheet reduced by INR13b to INR163.7b
(80% of capital employed).
Valuation and view
FY21 would be another challenging year for the domestic 2W industry as well as
for BJAUT due to the COVID-19 pandemic and its impact. As a result, BJAUT
should see pressure in its export volumes. Also, the company would face the
impact of lower oil prices in some of its key African markets. We estimate
volumes to decline by 17% in FY21 and grow 10% in FY22E.
Leveraging its strong alliance with
KTM
and its latest partnerships with
Husqvarna
and
Triumph,
BJAUT would have the widest range of premium
motorcycles on offer. Also, its re-entry into scooters through
e-Chetak
would
give it an early-mover advantage in the e-scooter segment.
Valuations at 17.3x/15.9x FY21/FY22E consol. EPS is a fair reflection of the tepid
earnings growth expectation as well as near-term volume weakness. With
outlook over the next 6-9 months remaining challenging due to the impact of
COVID-19 as well as BS-VI related cost inflation, we estimate BJAUT’s EPS to
decline at 3.5% CAGR over FY20-22E. Maintain Neutral with TP of INR2,895 (16x
Jun’22E consol. EPS v/s 10-year average P/E of 17.3x).
8 July 2020
4
 Motilal Oswal Financial Services
Bajaj Auto
Exhibit 1: 2W industry has faced several consistent headwinds over last 2 years
Source: Company
Exhibit 2: Domestic motorcycle market share for BJAUT was broadly stable in FY20 (%)
FY19
FY20
44.1
44.7
18.7
18.5
14.1
14.3
7.4
10.1
Overall Dom. M/Cycle
<125cc M/Cycle
Sports (150-220cc)
Super Sports (>220cc)
Source: Company
Exhibit 3: Domestic 3W market share increased across segments, but export market share
declined (%)
FY19
FY20
Petrol & Alt Small Diesel Large Diesel Overal Diesel Dom. Pass Dom. Goods 3W Exports
fuel
3W
3W
Sh (from
India)
Source: Company
8 July 2020
5
 Motilal Oswal Financial Services
Bajaj Auto
Exhibit 4: No material capacity addition in 2Ws in last 5
years and but 40% increase in 3Ws…
Capacity ('000 units)
660
660
660
660
M/Cycle
840
930
3Ws
930
68
67
Exhibit 5: …but lower demand has resulted in capacity
utilization declining for both 3Ws and motorcycles
Capacity Utilization (%)
79
81
68
60
76
3Ws
84
78
61
62
62
M/Cycle
72
73
5,100
5,400
5,400
5,400
5,400
5,400
5,400
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Source: Company
Source: Company
Exhibit 6: BJAUT witnessed record-high exports, growing 4% YoY
31.2
Exports (000 units)
14.0
-2.1
2.4
-3.7
-18.9
1,580
FY12
1,547
FY13
1,584
FY14
1,806
FY15
1,740
FY16
1,411
FY17
1,663
FY18
2,079
FY19
2,171
Growth %
17.8
25.0
4.4
FY20
Source: Company
Exhibit 7: Export contribution from Africa increased to 53% in FY20 (%)
Africa
10
18
31
41
FY18
South Asia & ME
11
14
28
47
FY19
Latin America
ASEAN
11
14
22
53
FY20
Source: Company
Exhibit 8: KTM AG key operating indicators
EUR m
Volumes
Growth (%)
- of which supplied by BJAUT
% of total sales
- of which sold in India
% of total sales
Revenues
Growth (%)
Gross Profit
Gross Margins (%)
PAT
PAT Margins (%)
CY17
191,270
-6.0
98,132
51.3
46,321
24.2
1,332
16.8
374.6
28.1
79
5.9
CY18
211,931
10.8
99,862
47.1
50,705
23.9
1,455
9.2
417.1
28.7
89.8
6.2
CY19
213,949
1.0
110,870
51.8
64,058
29.9
1,513
4.0
440.5
29.1
84.6
5.6
Source: Company
8 July 2020
6
 Motilal Oswal Financial Services
Bajaj Auto
Exhibit 9: Outstanding hedge position of USD1.49b, of which USD1.31b is for FY21 – this is 85% of our est. export revenues
Source: Company
Exhibit 10: BJAUT started granting ESOPs from FY20
Details
Outstanding options at beginning of the year
Options granted during the year
Exercise Price (INR)
Options cancelled during the year
Outstanding options at end of the year
Wt. avg remaining contractual life (years)
31-Mar-20
0
287,636
2,942.65
6,837
280,799
6.63
Source: Company
Exhibit 11: Reduction in working capital and tight control on
capex led growth in FCF generation
CFO (INR b)
34
19
37
21
-3
FY15
-3
FY16
33
31
24
43
25
-2
FY17
-2
FY18
-1
FY19
-3
FY20
39
Capex (INR b)
41
FCF (INR b)
36
Exhibit 12: Increase in capex as well R&D in FY20
Exp R&D (% of sales)
Cap. R&D (% of sales)
Capex (% of sales)
1.4
0.6
1.0
1.1
0.2
1.3
0.9
0.2
1.5
0.7
0.2
1.3
0.4
0.2
1.3
0.9
0.2
1.4
Source: Company
Source: Company
8 July 2020
7
 Motilal Oswal Financial Services
Bajaj Auto
Exhibit 13: Key operating metrics
000 units
Motorcycles (units)
Domestic
Growth (%)
% of total volumes
Exports
Growth (%)
% of total volumes
Total M/Cycles
Growth (%)
% of total volumes
3Ws
Domestic
Growth (%)
% of total volumes
Exports
Growth (%)
% of total volumes
3Ws
Growth (%)
% of total volumes
Total Volumes
Growth (%)
Avg. Net Realn (INR/unit)
Growth (%)
Net Revenues (INR B)
Growth (%)
EBITDA (INR B)
Ebitda margins (%)
EBITDA (INR/Unit)
Growth (%)
Consol. PAT (INR B)
Consol. EPS
FY14
2,099
-14.8
54.2
1,323
2.3
34.2
3,422
-8.9
88.4
187
-17.3
4.8
261
2.7
6.7
448
-6.7
11.6
3,870
-8.7
48,443
8.5
197
1.2
41
20.4
10,609
12.9
34
117
FY15
1,771
-15.6
46.5
1,521
15.0
39.9
3,292
-3.8
86.4
234
25.4
6.1
285
9.2
7.5
519
16.0
13.6
3,811
-1.5
51,853
7.0
211
7.0
41
19.0
10,801
0.3
33
113
FY16
1,899
7.2
48.8
1,459
-4.1
37.5
3,358
2.0
86.3
255
8.8
6.5
280
-1.6
7.2
535
3.1
13.7
3,894
2.2
53,697
3.6
222
5.0
48
21.2
12,282
16.2
42
143
FY17
2,001
5.4
54.6
1,219
-16.5
33.2
3,220
-4.1
87.8
253
-0.7
6.9
193
-31.2
5.3
446
-16.7
12.2
3,666
-5.8
54,482
1.5
214
-3.5
44
20.3
12,063
-7.5
41
141
FY18
1,975
-1.3
49.3
1,395
14.5
34.8
3,369
4.6
84.1
370
46.0
9.2
268
38.9
6.7
637
42.9
15.9
4,007
9.3
55,745
2.3
247
15.6
48
19.2
12,073
9.4
44
151
FY20
2,078
-18.2
45.0
1,869
10.2
40.5
3,948
-6.8
85.5
366
-8.4
7.9
302
-21.2
6.5
668
-14.7
14.5
4,615
-8.1
56,462
6.7
291
-1.5
51
17.0
11,042
-1.9
54
187
FY21E
1,808
-13.0
45.5
1,645
-12.0
41.4
3,453
-12.5
86.9
245
-33.0
6.2
275
-9.0
6.9
520
-22.1
13.1
3,973
-13.9
55,755
-1.3
254
-12.6
45
17.1
11,315
-11.8
48
165
FY22E
2,025
12.0
46.1
1,809
10.0
41.2
3,835
11.0
87.3
260
6.0
5.9
297
8.0
6.8
556
7.1
12.7
4,391
10.5
57,034
2.3
287
12.9
51
17.2
11,621
13.5
52
179
Source: Company, MOFSL
8 July 2020
8
 Motilal Oswal Financial Services
Bajaj Auto
Story in charts
Exhibit 14: Trend in volume and volume growth
Volumes ('000 Units)
9.3
(5.8)
(8.1)
25.3
Growth (%)
10.5
7
6
40
(13.9)
46
49
Exhibit 15: Product mix trend
2W - Dom
7
7
37
2W - Exports
5
7
33
7
9
35
3W - Dom
8
8
34
7
8
41
3W - Exports
7
6
41
7
6
41
(1.5)
2.2
55
49
51
45
46
46
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 16: Trend in volume mix
3Ws (Exports)
Others (Dom)
CT100 (Dom)
12
25
16
34
5
7
FY14
13
15
17
40
6
7
FY15
7
6
16
37
7
7
FY16
3Ws (Dom)
Pulsar (Dom)
Platina (Dom)
10
12
9
16
33
7
5
FY17
11
12
6
16
35
9
7
FY18
2W Exports
Discover (Dom)
Exhibit 17: Trend in EBITDA and EBITDA margins
EBITDA (INR m)
19.0
13
15
3
18
34
8
8
FY19
12
15
4
19
35
7
6
FY20
21.2
20.3
19.2
EBITDA Margins (%)
17.1
17.0
17.1
17.2
FY15
FY16
FY17
FY18
FY19
FY20
FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 18: Trend in return ratios
RoCE (%)
RoE (%)
Exhibit 19: Dividend payout to remain healthy
Dividend Payout (%)
Dividend Yield (%)
4.1
2.9
2.6
1.7
1.9
1.9
2.1
2.1
53.2
FY15
FY16
FY17
FY18
FY19
FY20
FY21E FY22E
FY15
46.1
FY16
46.9
FY17
47.8
FY18
43.6
FY19
77.0
FY20
54.6
57.0
FY21E FY22E
Source: Company, MOFSL
Source: Company, MOFSL
8 July 2020
9
 Motilal Oswal Financial Services
Bajaj Auto
Financials and Valuations
Income Statement
Y/E March
Volumes
Change (%)
Net Sales
Change (%)
Total Expenditure
EBITDA
Change (%)
EBITDA Margins (%)
Depreciation
EBIT
Int. & Fin. Charges
Other Income
Non-recurring Exp.
PBT
Tax
Effective Rate (%)
PAT
Change (%)
Add: Share in profit of asso.
Adj. PAT
Change (%)
2015
3,811,201
-1.5
216,120
7.3
174,955
41,166
0.3
19.0
2,674
38,492
65
5,824
3,403
40,848
12,711
31.1
28,137
-13.2
2,137
32,619
(3.7)
2016
3,893,581
2.2
225,865
4.5
178,046
47,819
16.2
21.2
3,072
44,748
11
10,736
0
55,473
16,177
29.2
39,297
39.7
2,214
41,511
27.3
2017
3,665,950
-5.8
217,667
-3.6
173,443
44,224
-7.5
20.3
3,073
41,151
14
12,220
0
53,356
15,081
28.3
38,276
-2.6
2,546
40,822
(1.7)
2018
4,006,788
9.3
252,189
15.9
203,815
48,374
9.4
19.2
3,148
45,226
13
12,933
320
57,826
17,145
29.6
40,681
6.3
2,876
43,782
7.3
2019
5,019,503
25.3
303,576
20.4
251,651
51,925
7.3
17.1
2,657
49,268
45
14,389
-3,420
67,032
20,280
30.3
46,752
14.9
3,498
47,864
9.3
2020
4,615,212
-8.1
299,187
-1.4
248,224
50,962
-1.9
17.0
2,464
48,498
32
17,336
0
65,802
14,802
22.5
51,000
9.1
3,215
54,215
13.3
2021E
3,972,850
-13.9
262,617
-12.2
217,663
44,954
-11.8
17.1
2,500
42,454
20
15,612
0
58,046
13,191
22.7
44,855
-12.0
2,894
47,749
(11.9)
(INR M)
2022E
4,391,002
10.5
296,352
12.8
245,322
51,029
13.5
17.2
2,577
48,453
20
14,800
0
63,233
14,573
23.0
48,660
8.5
3,183
51,843
8.6
Balance Sheet
Y/E March
Share Capital
Net Worth
Deferred Tax
Loans
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Sundry Debtors
Cash & Bank Balances
Loans & Advances
Others
Current Liab. & Prov.
Sundry Creditors
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOFSL Estimates
2015
2,894
106,922
1,416
1,118
109,455
41,009
21,837
19,172
2,549
91,533
42,368
8,142
7,170
5,862
17,727
3,469
46,168
17,998
8,251
19,920
-3,800
109,455
2016
2,894
132,666
2,028
1,886
136,579
51,572
24,183
27,389
522
102,606
34,348
7,191
7,179
8,176
365
11,437
28,286
20,270
6,410
1,605
6,063
136,580
2017
2,894
170,341
3,136
1,764
175,242
45,917
25,900
20,018
422
147,315
40,395
7,284
9,533
2,798
362
20,418
32,907
22,357
8,559
1,991
7,488
175,242
2018
2,894
191,039
3,234
1,674
195,947
46,402
27,619
18,783
565
175,883
42,964
7,426
14,919
7,609
369
12,641
42,248
32,443
7,427
2,378
716
195,947
2019
2,894
217,799
5,427
1,685
224,910
47,915
30,275
17,639
480
191,594
64,091
9,615
25,597
9,054
380
19,445
48,894
37,867
9,475
1,552
15,197
224,911
2020
2,894
199,255
3,464
1,669
204,388
41,573
24,583
16,990
602
181,960
48,181
10,635
17,251
2,773
386
17,136
43,345
31,997
8,964
2,385
4,836
204,387
2021E
2,894
218,023
4,625
1,669
224,317
43,175
27,083
16,092
1,000
181,960
64,817
9,335
19,426
21,327
339
14,390
39,552
28,086
7,868
3,597
25,265
224,317
2022E
2,894
237,118
5,889
1,669
244,676
45,675
29,660
16,015
1,000
181,960
90,333
10,534
21,922
41,257
382
16,238
44,632
31,694
8,879
4,060
45,701
244,676
8 July 2020
10
 Motilal Oswal Financial Services
Bajaj Auto
Financials and Valuations
Ratios
Y/E March
Basic (INR)
Consol EPS
EPS growth (%)
Consol Cash EPS
Book Value per Share
DPS
Payout (Incl. Div. Tax) %
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price to Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors (Days)
Working Capital (Days)
Asset Turnover (x)
Fixed Asset Turnover
Leverage Ratio
Debt/Equity (x)
2015
112.7
-3.7
122.0
369.5
50.0
53.2
25.3
23.3
17.7
3.4
7.7
1.8
32.1
29.4
338
12
13
29
-4
2.0
5.3
0.0
2016
143.5
27.3
154.1
458.5
55.0
46.1
19.8
18.5
15.0
3.2
6.2
1.9
34.7
32.0
182
11
11
31
-9
1.7
4.9
0.0
2017
141.1
-1.7
151.7
588.7
55.0
46.9
20.2
18.8
15.3
3.1
4.8
1.9
26.9
24.6
118
15
12
35
-9
1.2
4.5
0.0
2018
151.3
7.3
162.2
660.2
60.0
47.8
18.8
17.6
13.3
2.5
4.3
2.1
24.2
22.0
174
21
11
46
-14
1.3
5.5
0.0
2019
165.4
9.3
174.6
752.7
60.0
43.6
17.2
16.3
12.0
2.1
3.8
2.1
23.4
21.1
193
31
12
46
-3
1.3
6.4
0.0
2020
187.4
13.3
195.9
688.6
120.0
77.0
15.2
14.5
12.6
2.1
4.1
4.2
26.0
23.8
176
21
13
39
-5
1.5
7.1
0.0
2021E
165.0
-11.9
173.6
753.4
75.0
54.6
17.3
16.4
13.8
2.4
3.8
2.6
22.9
20.9
168
27
13
39
1
1.2
6.2
0.0
2022E
179.2
8.6
188.1
819.4
85.0
57.0
15.9
15.1
11.8
2.0
3.5
3.0
22.8
20.8
100
27
13
39
1
1.2
6.7
0.0
Cash Flow Statement
Y/E March
Profit before Tax
Direct Taxes Paid
(Inc)/Dec in Working Capital
Other Items
CF from Oper. Activity
Extra-ordinary Items
CF after EO Items
(Inc)/Dec in FA+CWIP
Free Cash Flow
(Pur)/Sale of Invest.
CF from Inv. Activity
Inc. / Dec.in Networth
Inc/(Dec) in Debt
Interest Paid
Dividends Paid
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Beginning Bal.
Closing Balance
E: MOFSL Estimates
2015
40,848
-12,854
-5,825
-3057
21,786
-313
21,473
-2,933
18,540
-1,211
-4,144
0
532
-65
-16,909
-16,442
888
4,863
5,751
2016
55,473
-18,195
5,753
-9236
36,866
-298
36,568
-2,582
33,986
2,394
-188
0
501
-5
-34,337
-33,841
2,539
5,637
8,175
2017
53,356
-15,026
2,533
-10269
33,667
-275
33,392
-1,970
31,422
-34,913
-36,883
0
128
-6
-2,022
-1,901
-5,392
8,190
2,798
2018
57,826
-16,851
10,451
-11738
42,836
-228
42,608
-1,833
40,775
-17,347
-19,180
0
0
-4
-18,848
-18,853
4,575
3,034
7,609
2019
67,032
-19,643
-7,030
-18061
24,954
-58
24,895
-1,082
23,814
-1,359
-2,441
0
28
-35
-20,733
-20,741
1,714
7,340
9,054
2020
65,802
-16,777
3,765
-16635
38,620
-3
38,618
-2,800
35,818
20,345
17,545
2021E
58,046
-12,030
-1,876
-15592
46,660
0
46,660
-2,000
44,660
0
-2,000
0
0
-20
-26,087
-26,107
18,553
2,773
21,327
(INR M)
2022E
48,453
-13,308
-506
-14780
52,015
0
52,015
-2,500
49,515
0
-2,500
0
0
-20
-29,565
-29,585
19,930
21,327
41,257
-21
-62,444
-62,465
-6,302
9,075
2,773
8 July 2020
11
 Motilal Oswal Financial Services
Bajaj Auto
NOTES
8 July 2020
12
 Motilal Oswal Financial Services
Bajaj Auto
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity
& Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the
website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for
distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document
relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order
to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
8 July 2020
13
 Motilal Oswal Financial Services
Bajaj Auto
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report
constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities
discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document
should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including
the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be
suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial
risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions
contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as
endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and
alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect
or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment
banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and
independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category
of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may
arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold
MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any
errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management
Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of
Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a
group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory
services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee
of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj
Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
8 July 2020
14