-
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112 +91 79-40504017) Page 1 of 12
Before reading this report, you must refer to the disclaimer on
the last page.
Bajaj Auto Ltd. Absolute : LONG
Relative : OVERWEIGHT
2QFY19 Result: Estimate (), PT (), Rating () Regular Coverage
31% ATR in 11 Months
Volumes to remain healthy, margins to revive in FY20, retain
LONG Auto
© 2018 Equirus All rights reserved
Rating Information
Price (Rs) 2,478
Target Price (Rs) 3,130
Target Date 30th Sep'19
Target Set On 25th oct'18
Implied yrs of growth (DCF) 15
Fair Value (DCF) 2,632
Fair Value (DDM) 1,057
Ind Benchmark BSEAUTO
Model Portfolio Position NA
Stock Information
Market Cap (Rs Mn) 716,907
Free Float (%) 50.70 %
52 Wk H/L (Rs) 3472.6/2421.45
Avg Daily Volume (1yr) 489,851
Avg Daily Value (Rs Mn) 1,424
Equity Cap (Rs Mn) 2,894
Face Value (Rs) 10
Bloomberg Code BJAUT IN
Ownership Recent 3M 12M
Promoters 49.3 % 0.0 % 0.0 %
DII 7.7 % -0.7 % -0.3 %
FII 17.4 % -0.2 % 0.7 %
Public 25.6 % 0.9 % -0.5 %
Price % 1M 3M 12M
Absolute -11.2 % -6.1 % -23.4 %
Vs Industry 3.6 % 14.1 % -0.7 %
Bajaj Auto -13.4 % -13.3 % -28.5 %
TVS Motors -12.4 % -3.9 % -25.1 %
Standalone Quarterly EPS forecast
Rs/Share 1Q 2Q 3Q 4Q
EPS (18A) 33.0 38.4 32.9 37.3
EPS (19E) 38.5 39.8 35.5 37.0
BJAUT’s delivered an in-line 2QFY19 with 3% yoy growth in EBITDA
(Rs 13.4bn), despite
25% yoy growth in volumes as discounts offered to gain market
share in domestic 2Ws
hurt margins. As we had stated earlier, discounting or some
other form of promotion
was critical for BJAUT to revive footfalls, dealer profitability
and market share, given
that market share is relatively difficult to revive (vis-à-vis
margins) in the long term.
Increase in Platina sales and market share stemmed from higher
footfalls in
dealerships. We expect EBITDA margins to improve gradually from
4Q with 18% margins
in FY20 as USD-INR realizations touch 73. We raise FY19E/FY20E
volumes by ~3% but
revise EPS estimates by -1%/1. Retain LONG with a Sep’19 TP of
Rs 3,130 set at 18x
Sep’19 EPS (Jun’19 TP: Rs 3,038).
Levers in place for further market share gains in motorcycles:
Management is now
comfortable with its CT100 market share in the entry segment, as
reflected in a price
hike of Rs 1,800 taken over Jul-Oct’18 after a cut of ~Rs 4,000
in April. While CT100
remains a loss-making model for BJAUT, higher footfalls due to
these offers helped revive
sales of Platina, whose market share in the
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 2 of 12
Quarterly performance, standalone
Rs Mn 2QFY19 2QFY19E 1QFY19 2QFY18 % Change
Comments 2QFY19E 1QFY19 2QFY18
Net Sales 79,868 80,249 74,193 65,799 0% 8% 21%
Raw Material 57,829 57,618 52,993 45,492 0% 9% 27%
Employee Cost 3,119 3,290 3,140 2,644 -5% -1% 18%
Other Expenses 5,490 5,707 5,246 4,679 -4% 5% 17%
Total Expenditures 66,438 66,615 61,379 52,815 0% 8% 26%
EBITDA 13,430 13,633 12,814 12,984 -1% 5% 3%
Depreciation 715 766 700 770 -7% 2% -7%
EBIT 12,714 12,867 12,115 12,214 -1% 5% 4%
Interest 3 0 3 5 0% -34%
Other Income 3,815 3,571 4,044 2,964 7% -6% 29%
PBT 16,527 16,438 16,156 15,174 1% 2% 9%
Tax 5,002 4,931 5,003 4,055 1% 0% 23%
Recurring PAT 11,525 11,506 11,152 11,119 0% 3% 4%
Extraordinaries 1,753 0 1,820 819
Reported PAT 9,772 11,506 9,332 10,300 -15% 5% -5%
EPS (Rs) 39.8 39.8 38.5 38.4 0% 3% 4%
Gross Margin 27.6% 28.2% 28.6% 30.9% -61 bps -98 bps -327
bps
EBITDA Margin 16.8% 17.0% 17.3% 19.7% -17 bps -46 bps -292
bps
EBIT Margin 15.9% 16.0% 16.3% 18.6% -11 bps -41 bps -264 bps
PBT Margin 20.7% 20.5% 21.8% 23.1% 21 bps -108 bps -237 bps
PAT Margin 12.2% 14.3% 12.6% 15.7% -210 bps -34 bps -342 bps
Tax Rate 30.3% 30.0% 31.0% 26.7% 26 bps -70 bps 354 bps
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 3 of 12
Rs Mn 2QFY19 2QFY19E 1QFY19 2QFY18 % Change
Comments 2QFY19E 1QFY19 2QFY18
2W Volumes 1,126,542 1,126,542 1,029,964 918,721 0.0% 9.4%
22.6%
Domestic 2W 692,899 692,899 594,234 583,997 0.0% 16.6% 18.6%
Export 2W 433,643 433,643 435,730 334,724 0.0% -0.5% 29.6%
3W Volumes 212,902 212,902 196,677 152,789 0.0% 8.2% 39.3%
Domestic 3W 111,746 111,746 94,431 84,938 0.0% 18.3% 31.6%
Export 3W 101,156 101,156 102,246 67,851 0.0% -1.1% 49.1%
Domestic Volumes 804,645 804,645 688,665 668,935 0.0% 16.8%
20.3%
Export Volumes 534,799 534,799 537,976 402,575 0.0% -0.6%
32.8%
Domestic Sales (Rs mn) 50,789 48,567 42,683 41,599 4.6% 19.0%
22.1%
Export Sales (Rs mn) 29,079 31,682 31,510 24,200 -8.2% -7.7%
20.2%
ASP (Rs/unit) 59,628 59,912 60,485 61,408 -0.5% -1.4% -2.9%
Domestic ASP (Rs/unit) 59,314 60,358 61,979 62,187 -1.7% -4.3%
-4.6%
Export ASP (Rs/unit) 58,061 59,240 58,571 60,113 -2.0% -0.9%
-3.4%
EBITDA/Vehicle (Rs/unit) 10,026 10,178 10,447 12,117 -1.5% -4.0%
-17.3%
Cost items as % of Sales
RM 72.4% 71.8% 71.4% 69.1% 61 bps 98 bps 327 bps
Employee Cost 3.9% 4.1% 4.2% 4.0% -19 bps -33 bps -11 bps
Other Expenses 6.9% 7.1% 7.1% 7.1% -24 bps -20 bps -24 bps
Adj Other Expenses 6.9% 7.1% 7.1% 7.1% -24 bps -20 bps -24
bps
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 4 of 12
Exhibit 1: Domestic quarterly 2W volume mix (in ‘000 units)
Source: Company, Equirus Securities
Exhibit 2: Quarterly 2W export volume mix (In ‘000 units)
Source: SIAM, Equirus Securities
Exhibit 3:3W domestic & export sales volumes (in ‘000
units)
Source: Company, Equirus Securities
Exhibit 4:Export & domestic sales (Rs bn); exports as % of
sales vs. EBITDA margins
Source: SIAM, Equirus Securities
258
200
195
181 2
90
230
217
184
231
251
204
149
186 282
244
240 323 421
57
26 18 13
1345 54
3529 25
3145
36
3224 25
19
13124
172 164127
126119 128
169
223 218
165137
134
151
119 113
162
166491
462439
379
486 469 475 469
549580
459414 427
584
466498
594
688
0
100
200
300
400
500
600
700
1Q
FY15
2Q
FY15
3Q
FY15
4Q
FY15
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
>75cc & 110cc 125cc but 150 =200cc
241
248
251
137
244
258
214
137
172
155
158
158
168
183
207
211
239
254
3880 45
39
24 26
20
2227
26 22 2435 30
38 41
55 5456
6062
74
7297
70
79
90 99 75 7385 64
61 56
79 7536
3838
34
38
46
42
35
26 2928 22
41 3634 36
44 39384
438406
294
389
434
352
284
324 318290 287
349 335352 359
436 434
0
50
100
150
200
250
300
350
400
450
1Q
FY15
2Q
FY15
3Q
FY15
4Q
FY15
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
>75cc & 110cc 125cc but 150 =200cc
5675
55 49 5167 66 71 75 74 54 50 52
85110 122
94112
58
8284
6187
8658 49 47
60
4937
60
68
7367
102101
114
156139
110
138153
124 120 122135
10387
113
153
183 189197
213
0
40
80
120
160
200
240
1Q
FY15
2Q
FY15
3Q
FY15
4Q
FY15
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
Domestic Export
43%46% 47%
44%47% 47%
41%38%
36% 35%38%
36%
46%
37% 38% 35%
42%39%
17.6%18.9%21.7%
17.7%20.4%21.7%21.1%21.5%20.5%21.4%20.6%
18.5%17.2%19.7%19.3%19.4%
17.3%16.8%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
10
20
30
40
50
60
70
80
1Q
FY15
2Q
FY15
3Q
FY15
4Q
FY15
1Q
FY16
2Q
FY16
3Q
FY16
4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
Domestic Exports Exports as % of Sales EBITDA Margin (%)
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 5 of 12
Earnings call takeaways
Industry & business update
• Till date, the festive season has been softer in western
states like Gujarat and
Maharashtra than North India. However, management expects demand
to bounce back
during the remaining part of the season.
• Cost pressures of insurance would get absorbed over 3-4
months, with growth likely
to recover from January.
• To combat commodity price inflation, BJAUT took price hikes in
the month of Oct’18.
2W prices of most models for the end customer were raised by
Rs 1,000/unit, and for 3Ws by Rs 1,500/unit.
• 3Ws, spares and exports are high-margin propositions with
margins of >20%. Pulsar
fetches close to ~20% margins and Platina single-digit
margins.
• BJAUT expects commodity prices to go up in 3QFY19.
• The company expects pre-buying to kick in before the BS-VI
roll out, which would
drive growth in 2HFY20.
• Bajaj Finance financed ~48% of sales; total financing is ~50%
plus.
Domestic 2W volumes, product pipeline
• No new product launches are planned for 3Q.
• New products in the M3 category are expected to be launched in
4QFY19.
• BJAUT is focused on gaining market share even if it is
margin-dilutive.
• Market for the M1 segment is expanding.
• With Platina picking up traction, BJAUT expects its
contribution to increase going
ahead.
• CT is a loss-making proposition, while Platina is a profitable
model and incremental
contribution would be margin accretive.
• Pulsar twin disk is gaining ground and contributes ~40% to the
Pulsar portfolio. Twin
Disk has been the fastest growing model and, being a value-added
product, should lead
to margin improvement.
• The company plans to come up with a newer version of classic
Pulsar, which would
grow at a higher rate than the Pulsar portfolio.
• CT contributes only 14% of revenues.
Domestic 3W volumes
• BJAUT expects to maintain a monthly run-rate of 30,000+ units
for 3Ws in the domestic
market.
• Demand is driven by consistent reduction in requirement of
permits.
• The cargo segment is also doing well and expected to drive the
topline.
• In 3Q, growth would be muted off a high base.
• CNG penetration is rising dramatically in the country. BJAUT
has a ~90% market share
in alternate fuel technology.
• BJAUT expects to clock 3W volumes of 800,000 in the domestic
and export markets in
FY19.
• Capacity for 3Ws is ~850,000 vehicles per year, and the
company expects it to increase
to 1mn to meet increasing demand.
Exports, spare parts, taxes & capex
• Share of Africa has been rising in the last one year, and
should reach 50% from 45%
currently.
• The African market is largely driven by Boxer. However, the
mix is improving gradually
and moving towards the 150cc segment.
• BJAUT’s market share in Uganda is ~90%, Ethiopia ~65% and
Kenya ~45%. The company
has strong ground in East Africa but is facing challenges in
West Africa.
• The total export market in which BJAUT operates is 6.5mn-6.6mn
units.
• Realization per US$ is expected to reach ~Rs 70 in 3Q and 4Q,
and ~Rs 73 in FY20. In
2QFY19, it stood at Rs 69.4.
• FY19E capex guidance is at ~Rs 3bn, largely for new models,
R&D and debottlenecking.
• Tax rate for FY19 is expected at ~31%.
• Spares exports stood at ~2.43bn and domestic sales at Rs
5.67bn.
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 6 of 12
Company Snapshot
How we differ from Consensus
- Equirus Consensus % Diff Comment
EPS FY19E 161.4 151.4 7 % In line with consensus
FY20E 186.6 170.6 9 %
Sales FY19E 294,641 293,326 0 %
FY20E 326,388 328,971 -1 %
PAT FY19E 43,123 43,765 -1 %
FY20E 54,002 49,435 9 %
Key Assumptions: FY18A FY19E FY20E FY21E
2W Domestic Sales 1,974,577 2,391,089 2,609,411 2,687,694
yoy change -1.3% 21.1% 9.1% 3.0%
2W Export Sales 1,394,757 1,665,425 1,831,968 2,015,165
yoy change 14.5% 19.4% 10.0% 10.0%
Total 2W Sales 3,369,334 4,056,515 4,441,379 4,702,858
yoy change 4.6% 20.4% 9.5% 5.9%
3W Domestic Sales 369,637 400,868 406,128 426,434
yoy change 46.0% 8.4% 1.3% 5.0%
3W Export Sales 267,820 395,801 417,452 450,848
yoy change 38.9% 47.8% 5.5% 8.0%
Total 3W Sales 637,457 796,670 823,580 877,282
yoy change 42.9% 25.0% 3.4% 6.5%
ASP 62,806 60,711 61,992 63,843
yoy change 5.8% -3.3% 2.1% 3.0%
EBITDA Margin 19.0% 17.0% 18.0% 18.0%
Tax Rate 29.5% 30.3% 30.0% 30.0%
NCW Days -21 -19 -20 -20 Risk to our view: A sharp recovery in
domestic volumes would be an upside risk to our
volume estimates.
Key triggers
• Margin decline & volume pressure
Sensitivity to Key Variables % Change % Impact on EPS
EBITDA Margin 1 % 5 %
Volume 1 % 1 %
- - -
DCF Valuations & Assumptions
Rf Beta Ke Term. Growth Debt/IC in Term. Yr
7.7 % 0.9 12.8 % 3.0 % 0.0 %
- FY19E FY20E FY21-23E FY24-28E FY29-33E
Sales Growth 17 % 11 % 6 % 7 % 6 %
NOPAT Margin 11 % 12 % 12 % 12 % 12 %
IC Turnover 8.35 8.69 9.32 9.32 9.32
RoIC 86.6 % 106.7 % 114.8 % 115.8 % 115.5 %
Years of strong growth 1 2 5 10 15
Valuation as on date (Rs) 1,618 1,771 1,955 2,185 2,352
Valuation as of 30thSep'18 1,810 1,981 2,187 2,445 2,632
On P/E basis, our Sep’19 TP stands at Rs 3,130 set at 18x EPS.
Our DCF-based Jun’19 fair
value is Rs 2,631.
Company Description:
Bajaj Auto is the flagship company of Bajaj group, one among the
Top 10 business houses
in India. Company is also India’s largest 2W & 3W exporter,
accounting for 2/3rd of India’s
2W export. Company came into existence as M/s Bachraj Trading
Corporation Private
Limited in 1945. In 1972 company launched their 1st scooter by
the name ‘Chetak’. The
Rear Engine Auto rickshaw was introduced in 1977 &Bajaj
achieved production and sales of
100,000 vehicles in a single financial year. Company entered
into the motorcycle segment
in 1986 with launch of Bajaj M-80 and the Kawasaki Bajaj
KB100.
Comparable valuation Mkt Cap
Rs. Mn.
Price
Target
Target
Date
EPS P/E BPS P/B RoE Div Yield
Company Reco. CMP FY18A FY19E FY20E FY18A FY19E FY20E FY18A
FY19E FY18A FY19E FY20E FY18A FY19E
Bajaj Auto LONG 2,478 716,907 3,130 30th Sep'19 146.9 161.4
186.6 16.9 15.4 13.3 705.9 3.2 22 % 22 % 23 % 2.4 % 2.6 %
Hero Motocorp ADD 2,695 538,242 3,100 30th Sept'19 185.1 176.2
190.6 15.6 16.4 15.2 579.0 4.6 34 % 29 % 29 % 3.0 % 3.0 %
TVSMOTOR NA 519 246,641 NA NA 17.2 16.3 21.4 30.2 31.8 24.3 17.9
25.1 12 % 22 % 23 % 0.4 % 0.2 %
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 7 of 12
Standalone Quarterly Earnings Forecast and Key Drivers Rs in Mn
1Q18A 2Q18A 3Q18A 4Q18A 1Q19E 2Q19E 3Q19E 4Q19E 1Q20E 2Q20E 3Q20E
4Q20E FY18A FY19E FY20E FY21E
Revenue 54,424 65,799 63,693 67,733 74,193 79,868 69,418 71,161
80,204 87,719 78,032 80,432 251,649 294,640 326,387 356,256
EBITDA 9,384 12,984 12,315 13,152 12,814 13,430 11,662 12,240
14,434 16,246 13,734 14,236 47,834 50,146 58,650 64,196
Depreciation 753 770 747 879 700 715 717 836 738 757 775 857
3,148 2,967 3,126 3,423
EBIT 8,631 12,214 11,568 12,274 12,115 12,714 10,946 11,404
13,696 15,489 12,959 13,380 44,686 47,178 55,524 60,773
Interest 2 5 3 3 3 3 0 0 0 0 0 0 13 6 0 0
Other Income 4,573 2,964 2,269 3,667 4,044 3,815 3,726 3,880
4,167 4,092 4,257 4,444 13,473 15,466 16,959 19,275
PBT 13,201 15,174 13,833 15,937 16,156 16,527 14,672 15,284
17,862 19,581 17,216 17,824 58,146 62,638 72,483 80,048
Tax 3,642 4,055 4,309 5,138 5,003 5,002 4,401 4,585 5,359 5,874
5,165 5,347 17,145 18,992 21,745 24,014
Recurring PAT 9,559 11,119 9,524 10,799 11,152 11,525 10,270
10,699 12,504 13,707 12,051 12,477 41,001 43,646 50,738 56,034
Extraordinary 324 819 -923 1,204 1,820 1,753 0 0 0 0 0 0 1,424
3,573 0 0
Reported PAT 9,235 10,300 10,448 9,595 9,332 9,772 10,270 10,699
12,504 13,707 12,051 12,477 39,578 40,073 50,738 56,034
EPS (Rs) 33.03 38.42 32.91 37.32 38.54 39.83 35.49 36.97 43.21
47.37 41.65 43.12 141.69 150.83 175.34 193.64
Key Drivers
2W Domestic Volumes 426,562 583,997 466,431 497,587 594,234
692,899 531,731 572,225 653,657 741,402 584,904 629,448 1,974,577
2,391,089 2,609,411 2,687,694
2W Export Volumes 349,152 334,724 352,079 358,802 435,730
433,643 401,370 394,682 479,303 477,007 441,507 434,150 1,394,757
1,665,425 1,831,968 2,015,165
3W Domestic Volumes 52,347 84,938 110,123 122,229 94,431 111,746
96,908 97,783 90,654 106,159 101,754 107,562 369,637 400,868
406,128 426,434 3W Export Volumes 60,373 67,851 72,836 66,760
102,246 101,156 97,600 94,799 100,412 109,248 105,408 102,383
267,820 395,801 417,452 450,848
- - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
Sequential Growth (%)
Revenue 11 % 21 % -3 % 6 % 10 % 8 % -13 % 3 % 13 % 9 % -11 % 3 %
- - - -
EBITDA 4 % 38 % -5 % 7 % -3 % 5 % -13 % 5 % 18 % 13 % -15 % 4 %
- - - -
EBIT 4 % 42 % -5 % 6 % -1 % 5 % -14 % 4 % 20 % 13 % -16 % 3 % -
- - -
Recurring PAT 19 % 16 % -14 % 13 % 3 % 3 % -11 % 4 % 17 % 10 %
-12 % 4 % - - - -
EPS 19 % 16 % -14 % 13 % 3 % 3 % -11 % 4 % 17 % 10 % -12 % 4 % -
- - -
Yearly Growth (%)
Revenue -5 % 9 % 26 % 38 % 36 % 21 % 9 % 5 % 8 % 10 % 12 % 13 %
11 % 17 % 11 % 9 %
EBITDA -20 % 0 % 18 % 45 % 37 % 3 % -5 % -7 % 13 % 21 % 18 % 16
% 0 % 5 % 17 % 9 %
EBIT -21 % 0 % 20 % 48 % 40 % 4 % -5 % -7 % 13 % 22 % 18 % 17 %
0 % 6 % 18 % 9 %
Recurring PAT -2 % -1 % 3 % 35 % 17 % 4 % 8 % -1 % 12 % 19 % 17
% 17 % 4 % 6 % 16 % 10 %
EPS -2 % -1 % 3 % 35 % 17 % 4 % 8 % -1 % 12 % 19 % 17 % 17 % 4 %
6 % 16 % 10 %
Margin (%)
EBITDA 17 % 20 % 19 % 19 % 17 % 17 % 17 % 17 % 18 % 19 % 18 % 18
% 19 % 17 % 18 % 18 %
EBIT 16 % 19 % 18 % 18 % 16 % 16 % 16 % 16 % 17 % 18 % 17 % 17 %
18 % 16 % 17 % 17 %
PBT 24 % 23 % 22 % 24 % 22 % 21 % 21 % 21 % 22 % 22 % 22 % 22 %
23 % 21 % 22 % 22 %
PAT 18 % 17 % 15 % 16 % 15 % 14 % 15 % 15 % 16 % 16 % 15 % 16 %
16 % 15 % 16 % 16 %
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 8 of 12
Consolidated Financials P&L (Rs Mn) FY18A FY19E FY20E FY21E
Balance Sheet (Rs Mn) FY18A FY19E FY20E FY21E Cash Flow (Rs Mn)
FY18A FY19E FY20E FY21E
Revenue 251,649 294,641 326,388 356,257 Equity Capital 2,894
2,894 2,894 2,894 PBT 56,778 62,610 72,454 80,019
Op. Expenditure 203,833 244,526 267,769 292,093 Reserve 201,359
221,843 251,465 286,613 Depreciation 3,148 2,967 3,126 3,423
EBITDA 47,816 50,115 58,619 64,164 Networth 204,252 224,737
254,359 289,507 Others 320 -3,573 0 0
Depreciation 3,148 2,967 3,126 3,423 Long Term Debt 0 0 0 0
Taxes Paid 17,145 18,992 21,745 24,014
EBIT 44,668 47,148 55,492 60,741 Def Tax Liability 6,043 4,270
4,270 4,270 Change in WC 13,229 1,495 2,114 1,668
Interest Expense 13 6 0 0 Minority Interest 0 0 0 0 Operating
C/F 56,330 44,508 55,950 61,095
Other Income 12,123 15,468 16,962 19,278 Account Payables 32,444
17,445 22,266 26,081 Capex 11,008 3,699 -5,000 -5,000
PBT 56,778 62,610 72,454 80,019 Other Curr Liabi 8,670 33,851
35,713 37,186 Change in Invest -5,607 -3,077 -3,293 -3,523
Tax 17,145 18,992 21,745 24,014 Total Liabilities & Equity
251,410 280,303 316,608 357,044 Others 0 0 0 0
PAT bef. MI &
Assoc. 39,633 43,619 50,709 56,004 Net Fixed Assets 18,783
18,688 20,561 22,139 Investing C/F 5,400 622 -8,293 -8,523
Minority Interest 0 0 0 0 Capital WIP 565 307 307 307 Change in
Debt -1,692 0 0 0
Profit from Assoc. 2,876 3,077 3,293 3,523 Others 33,552 30,317
33,610 37,133 Change in Equity 3,754 0 0 0
Recurring PAT 42,509 46,696 54,002 59,528 Inventory 7,426 6,041
6,828 7,450 Others -15,968 -21,335 -21,087 -20,857
Extraordinaires -320 3,573 0 0 Account Receivables 14,919 20,334
22,983 25,079 Financing C/F -13,905 -21,335 -21,087 -20,857
Reported PAT 42,829 43,123 54,002 59,528 Other Current Assets
4,583 9,240 10,372 11,274 Net change in cash 47,826 23,795 26,570
31,715
FDEPS (Rs) 146.9 161.4 186.6 205.7 Cash 171,582 195,377 221,947
253,663 RoE (%) 22 % 22 % 23 % 22 %
DPS (Rs) 60.0 65.0 70.0 70.0 Total Assets 251,410 280,303
316,608 357,044 RoIC (%) 22 % 21 % 22 % 22 %
CEPS (Rs) 157.8 171.6 197.4 217.5 Non-cash Working Capital
-14,186 -15,682 -17,796 -19,464 Core RoIC (%) 59 % 87 % 107 % 112
%
FCFPS (Rs) 213.4 156.0 164.7 181.7 Cash Conv Cycle -20.6 -19.4
-19.9 -19.9 Div Payout (%) 49 % 52 % 45 % 41 %
BVPS (Rs) 705.9 776.6 879.0 1,000.5 WC Turnover -17.7 -18.8
-18.3 -18.3 P/E 16.9 15.4 13.3 12.0
EBITDAM (%) 19 % 17 % 18 % 18 % FA Turnover 13.0 15.5 15.6 15.9
P/B 3.5 3.2 2.8 2.5
PATM (%) 17 % 16 % 17 % 17 % Net D/E -0.8 -0.9 -0.9 -0.9 P/FCFF
11.6 15.9 15.0 13.6
Tax Rate (%) 30 % 30 % 30 % 30 % Revenue/Capital
Employed 1.6 1.5 1.5 1.5 EV/EBITDA 11.5 10.5 8.5 7.3
Sales Growth (%) 16 % 17 % 11 % 9 % Capital Employed/Equity 1.0
1.0 1.0 1.0 EV/Sales 2.2 1.8 1.5 1.3
FDEPS Growth (%) 4 % 10 % 16 % 10 % Dividend Yield (%) 2.4 % 2.6
% 2.8 % 2.8 %
TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr
forward EBITDA growth TTM P/B vs. 2 yr forward RoE
4x
8x
12x
16x
20x
-40%
-20%
0%
20%
40%
60%
0
1000
2000
3000
4000
Ma
y-0
8
Jan
-09
Se
p-0
9
Ma
y-1
0
Jan
-11
Se
p-1
1
Ma
y-1
2
Jan
-13
Se
p-1
3
Ma
y-1
4
Jan
-15
Se
p-1
5
Ma
y-1
6
Jan
-17
Se
p-1
7
Ma
y-1
8
Jan
-19
Se
p-1
9
EPS Growth
-40%
-20%
0%
20%
40%
60%
80%
0100000200000300000400000500000600000700000800000
May
-08
Nov
-08
May
-09
Nov
-09
May
-10
Nov
-10
May
-11
Nov
-11
May
-12
Nov
-12
May
-13
Nov
-13
May
-14
Nov
-14
May
-15
Nov
-15
May
-16
Nov
-16
May
-17
Nov
-17
May
-18
Nov
-18
May
-19
Nov
-19
8x
10x
12x
14x
16x
EBITDA Growth
0%
20%
40%
60%
80%
100%
0
1000
2000
3000
4000
5000
Ma
y-0
8
Jan
-09
Se
p-0
9
Ma
y-1
0
Jan
-11
Se
p-1
1
Ma
y-1
2
Jan
-13
Se
p-1
3
Ma
y-1
4
Jan
-15
Se
p-1
5
Ma
y-1
6
Jan
-17
Se
p-1
7
Ma
y-1
8
Jan
-19
Se
p-1
9
RoE
3x
4x
5x
6x
7x
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 9 of 12
Historical Consolidated Financials P&L (Rs Mn) FY15A FY16A
FY17A FY18A Balance Sheet (Rs Mn) FY15A FY16A FY17A FY18A Cash Flow
(Rs Mn) FY15A FY16A FY17A FY18A
Revenue 216,143 225,865 217,667 251,649 Equity Capital 2,894
2,894 2,894 2,894 PBT 44,232 54,575 53,329 56,778
Op. Expenditure 175,010 178,054 173,473 203,833 Reserve 108,060
127,561 175,672 201,359 Depreciation 2,675 3,072 3,073 3,148
EBITDA 41,132 47,811 44,194 47,816 Networth 110,953 130,454
178,566 204,252 Others -6,460 0 0 320
Depreciation 2,675 3,072 3,073 3,148 Long Term Debt 1,118 1,625
1,692 0 Taxes Paid 12,853 16,177 15,081 17,145
EBIT 38,458 44,739 41,121 44,668 Def Tax Liability 2,816 2,656
3,990 6,043 Change in WC -6,457 -8,908 -3,168 13,229
Interest Expense 65 11 14 13 Minority Interest 0 0 0 0 Operating
C/F 21,138 32,562 38,154 56,330
Other Income 5,840 9,846 12,222 12,123 Account Payables 17,998
20,271 2,799 32,444 Capex -2,949 -4,489 -11,281 11,008
PBT 44,232 54,575 53,329 56,778 Other Curr Liabi 26,770 9,260
29,329 8,670 Change in Invest -4,185 20,685 -8,521 -5,607
Tax 13,492 16,177 15,081 17,145 Total Liabilities & Equity
159,656 164,266 216,376 251,410 Others 2,994 0 0 0
PAT bef. MI & Assoc. 30,740 38,398 38,249 39,633 Net Fixed
Assets 19,172 20,257 20,018 18,783 Investing C/F -4,140 16,197
-19,802 5,400
Minority Interest 0 0 0 0 Capital WIP 2,549 522 422 565 Change
in Debt 0 507 67 -1,692
Profit from Assoc. 2,137 2,214 2,546 2,876 Others 42,266 23,941
41,009 33,552 Change in Equity 467 -1,956 26,472 3,754
Recurring PAT 32,877 40,613 40,795 42,509 Inventory 8,142 7,191
7,284 7,426 Others -16,909 -17,101 -15,275 -15,968
Extraordinaires 0 0 0 -320 Account Receivables 7,170 7,179 9,533
14,919 Financing C/F -16,442 -18,550 11,264 -13,905
Reported PAT 32,877 40,613 40,795 42,829 Other Current Assets
16,424 11,036 14,354 4,583 Net change in cash 556 30,208 29,616
47,826
EPS (Rs) 113.6 140.3 141.0 146.9 Cash 63,933 94,141 123,757
171,582 RoE (%) 31 % 34 % 26 % 22 %
DPS (Rs) 50.0 55.0 55.0 60.0 Total Assets 159,656 164,266
216,376 251,410 RoIC (%) 30 % 33 % 26 % 22 %
CEPS (Rs) 122.9 151.0 151.6 157.8 Non-cash Working Capital
-13,033 -4,125 -958 -14,186 Core RoIC (%) 67 % 66 % 49 % 59 %
FCFPS (Rs) 58.9 168.5 63.5 213.4 Cash Conv Cycle -22.0 -6.7 -1.6
-20.6 Div Payout (%) 52 % 47 % 47 % 49 %
BVPS (Rs) 383.4 450.8 617.1 705.9 WC Turnover -16.6 -54.8 -227.3
-17.7 P/E 21.8 17.7 17.6 0.0
EBITDAM (%) 19 % 21 % 20 % 19 % FA Turnover 10.0 10.9 10.6 13.0
P/B 6.5 5.5 4.0 0.0
PATM (%) 15 % 18 % 19 % 17 % Net D/E -0.6 -0.7 -0.7 -0.8 P/FCFF
42.1 14.7 39.0 11.6
Tax Rate (%) 31 % 30 % 28 % 30 % Revenue/Capital
Employed 2.3 2.0 1.7 1.6 EV/EBITDA 16.0 13.2 13.6 0.0
Sales growth (%) 7 % 4 % -4 % 16 % Capital Employed/Equity 1.0
1.0 1.0 1.0 EV/Sales 3.1 2.8 2.8 0.0
FDEPS growth (%) -4 % 24 % 0 % 4 % Dividend Yield (%) 2.0 % 2.2
% 2.2 % 2.4 %
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 10 of 12
Equirus Securities
Research Analysts Sector/Industry Email Equity Sales E-mail
Abhishek Shindadkar IT Services [email protected]
91-22-43320643 Vishad Turakhia [email protected]
91-22-43320633
Ashutosh Tiwari Auto, Metals & Mining [email protected]
91-79-61909517 Subham Sinha [email protected]
91-22-43320631
Bharat Celly Healthcare [email protected] 91-79-61909524
Viral Desai [email protected] 91-22-43320635 Depesh Kashyap
Mid-Caps [email protected] 91-22-43320671 Viraj Mehta
[email protected] 91-22-43320634
Dhaval Dama FMCG, Mid-Caps [email protected]
91-79-61909518 Ruchi Bhadra [email protected] 91-22-43320601
Manoj Gori Consumer Durables [email protected] 91-79-61909523
Cash Dealing Room E-mail Maulik Patel Oil and Gas
[email protected] 91-79-61909519 Ashish Shah
[email protected] 91-22-43320662 Pranav Mehta Building
Materials [email protected] 91-79-61909514 Ilesh Savla
[email protected] 91-22-43320666
Praful Bohra Healthcare [email protected] 91-22-43320611
Manoj Kejriwal [email protected] 91-22-43320663
Rohan Mandora Banking & Financial Services
[email protected] 91-79-61909529 Dharmesh Mehta
[email protected] 91-22-43320661
Associates E-mail Sarit Sanyal [email protected]
91-22-43320666 Ankit Choudhary [email protected]
91-79-61909533 Vikram Patil [email protected] 91-22-43320677
Dhairya Dhruv [email protected] 91-79-61909528 Gaurav Mehta
[email protected] 91-22-43320680 Harshit Patel
[email protected] 91-79-61909522 Compliance Officer E-mail
Meet Chande [email protected] 91-79-61909513 Jay Soni
[email protected] 91-79-61909561 Nishant Bagrecha
[email protected] 91-79-61909526 Corporate
Communications E-mail
Prateeksha Malpani [email protected] 91-79-61909532
Mahdokht Bharda [email protected] 91-22-43320647
Ronak Soni [email protected] 91-79-61909525 Quant
Analyst
Rushabh Shah [email protected] 91-79-61909520 Kruti Shah
[email protected] 91-22-43320632
Shreepal Doshi [email protected] 91-79-61909541 F&O
Dealing Room
Varun Baxi [email protected] 91-79-61909527 Kunal Dand
[email protected] 91-22-43320678
Vikas Jain [email protected] 91-79-61909531 Dhananjay
Tiwari [email protected] 91-22-43320668
Mukesh Jain [email protected] 91-22-43320667
Rating & Coverage Definitions: Absolute Rating • LONG : Over
the investment horizon, ATR >= Ke for companies with Free Float
market cap >Rs 5 billion and ATR >= 20% for rest of the
companies • ADD: ATR >= 5% but less than Ke over investment
horizon • REDUCE: ATR >= negative 10% but
-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 11 of 12
© 2018 Equirus Securities Private Limited. All rights reserved.
For Private Circulation only. This report or any portion hereof may
not
be reprinted, sold or redistributed without the written consent
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all of the views expressed in this report accurately reflect my
personal views about the subject company or companies and its or
their securities. I also
certify that no part of my compensation was, is or will be,
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-
Bajaj Auto Ltd. Absolute –LONG Relative – OVERWEIGHT 31% ATR in
11 Months
October 26, 2018 Analyst: Ashutosh Tiwari [email protected]
(+91-8128694112, +91-79-40504017) Page 12 of 12
A graph of daily closing prices of securities is available at
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www.bseindia.com (Choose a company from the list on the browser and
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“three years” period in the price chart).
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If Yes, nature of such interest
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1% or more No
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