Q4FY19 – Result Update Institutional Research

May 18, 2019 BUY*

Bajaj Auto Downside
Scenario
Current
Price
Price
Target
Upside
Scenario
A Cherry Pick in the Tough Time!
3,042 3,445
New Launches, A&P and Better Schemes would aid in Outpacing the Industry 13.3%
• Bajaj Auto post its pricing actions on lower cc motorcycles, higher spends on
Market Data
A&P and providing 555 scheme to its customers has yielded improvement in
Industry Automobile
the market share in FY19. The management would continue these steps and
this time the target segment also includes the middle segment i.e. 125cc. Last Sensex 37,931
year, the market share gain was led by entry and sports segment. Nifty 11,407
• Bajaj Auto plans to launch at least six new models/upgrades in FY20E, which Bloomberg Code BJAUT:IN
should pull the customers towards showrooms in this soft demand Eq. Cap. (INR Crores) 29
environment. It has already launched an upgrade of its Dominar and Avenger
Face Value (INR) 10
motorcycles. But, we don’t expect any new brand launch, only upgrades &
smart, innovative products are expected across all the segments (Entry, 52-w H/L 3,214/2,425
Middle, Sports & Husqvarna launch). Hence, we believe Bajaj Auto would Market Cap (INR Crores) 88,020
continue to outpace the industry growth in FY20E as well.
• In the next twelve months time, Bajaj Auto with its aggressive product Valuation Data FY19 FY20E FY21E
launches will have far more complete portfolio, which will address everything OPM 16.5% 17.0% 17.3%
from entry to the sports segment. This will aid in improving its volumes, NPM 15.8% 15.3% 15.5%
realization as well as margins in the coming years.
P/E (x) 18.8 16.8 14.4
• The launch of electric 2Ws in FY20E would further aid in volume uptick. The
company will build the electric portfolio with or without the support of EV/EBITDA (x) 17.5 14.6 12.3
FAME-II as the long term plans cannot be dependent on the extent of FAME
promises. Bajaj Auto vs SENSEX

160
Margins & Realization Set to Climb Higher 150
• The softening of commodity prices, optimizing costs and moving up to higher 140
CC segments, this, along with operating leverage benefits would eventually 130
120
lead to an improvement in the margins in the coming years. The margins in 110
FY19 is one of the lowest in the past few years, as the focus was completely to 100
gain the market share supported by entry level motorcycles. For FY20E, the 90
80
management would like to attack all the segments, including the middle and 70
sports segment, which would support in improving its margin profile.

01-2018
01-2015
05-2015
09-2015
01-2016
05-2016
09-2016
01-2017
05-2017
09-2017

05-2018
09-2018
01-2019
05-2019
Impressive Performance from Exports | Outlook Stable SENSEX Bajaj Auto
• In FY19, the motorcycles reported a jump of 21.6% YoY, while three wheelers
reported 43.1% YoY growth. This was aided by growth across all the Shareholding Pattern (%)
geographies viz. Africa, ASEAN, South Asia and the Middle East. The 3Ws Mar-18 Dec-18 Mar-19
growth was supported by a recovery in its traditional geographies viz. Egypt &
Nigeria, while new markets like Cambodia, Iraq, Myanmar & Nepal also Promoters 49.3% 49.3% 51.2%
performed well. FII 17.2% 16.1% 15.6%
• The stability in oil prices and currencies would continue to support the
volume performance in the coming year. The Middle Eastern region and Iran DII 8.5% 8.2% 7.4%
is under the woods at present, otherwise, overall things are looking stable. Others 25.0% 26.4% 25.8%
The repeat of FY19 performance is on the cards for the next financial year. Total 100.0% 100.0% 100.0%
The three wheeler exports are expected to be higher in FY20E vis-à-vis FY19.

(INR Crores) FY17 FY18 FY19 FY20E FY21E

Revenue 21,767 25,165 30,250 35,112 40,468
Growth (%) -3.6% 15.6% 20.2% 16.1% 15.3%
EBITDA 4,422 4,783 4,982 5,981 7,019
Growth (%) -7.5% 8.2% 4.2% 20.1% 17.3%
EBITDA Margin (%) 20.3% 19.0% 16.5% 17.0% 17.3%
PAT 3,828 4,068 4,675 5,255 6,132
Growth (%) -2.6% 6.3% 14.9% 12.4% 16.7%
EPS (INR) 132 141 162 182 212
P/E (x) 19.7 20.9 18.8 16.8 14.4
EV/EBITDA (x) 17.0 17.6 17.5 14.6 12.3
Source: Company, NSPL Research
* Read last page for disclaimer & rating rationale

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED

Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 Bajaj Auto | Q4FY19 - Result Update | Page 2

Q4FY19 Result Analysis

Demand Environment remains Soft in the Near Term

• The industry witnessed a weak festive season, this continued in Q4FY19 as well and April numbers too were shocking for the
industry. The management doesn’t see sudden change in the macro economic environment in the short term. The rising cost of
ownership & interruption due to elections has led to weak sentiments across the markets. However, we believe psychology
plays a big role in uplifting the volumes, hence, think that post announcement of stable government, the volumes should
gradually pickup. We think there is a purchasing power out there, but, people are cautious and at present only want to spend
money on a right thing.
• Due to weak on going sentiments in the market, the management has not guided about volume growth for the next year and
would prefer to take it quarter by quarter. The new product launches, brand building exercise and better schemes would
continue to pull the customers. The management is confident of outpacing the industry growth.

Improved Market Share in Domestic Motorcycles

• The domestic motorcycle share has increased by ~300bps YoY to 18.7% in FY19. The share was even higher in Q4FY19 at about
20.0%. This was majorly supported by entry level segment, where the company has gained market share by 590bps YoY to
35.4% in FY19. The market share in the sports segment improved 510bps YoY to 44.1%, supported by Avenger & Pulsar brands.

Key Risks:
1. Higher than expected increase in the commodity prices can impact its margins.
2. Continued weakness in the domestic motorcycles.
3. Rising scooterization, which now contributes ~33% of the industry volumes and Bajaj has no presence in it.
4. Sharp weakness in the export markets led by a correction in the oil and commodity prices, etc.

SOTP Valuation FY21E Valuations:

Bajaj Auto has lot of potential and its strategic
Core EPS (INR) 212 moves are working well for the company. At a
Target P/E (x) 15.3 CMP of Rs. 3,042, the stock is trading at 14.4x of
FY21E EPS of Rs. 212. The company is a cash
Core Business (per share) 3,232
generating machine and we believe it has a lot of
potential in the coming years both in 2Ws as well
KTM Market Cap (Rs in Crores) 9,363 as 3Ws.
Bajaj Auto's Stake (%) 48%
The company in the past four years has been
Bajaj Auto's Stake (Rs in Crores) 4,493 trading at a forward P/E of 15.3x and we have
HoldCo Discount 40% assigned similar earnings multiple plus KTM and
Cash per Share, which takes the fair value to 3,445
Bajaj's Share (Net HoldCo Discount) 2,696 per share, seeking an upside of 13.3% from the
KTM Per Share 93 current levels.

Cash per Share 119

Bajaj Auto's Fair Value 3,445

Upside/(Downside) 13.3%
Source: Company, NSPL Research

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED

Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 Bajaj Auto | Q4FY19 - Result Update | Page 3
Q4FY19 Result Analysis
Q4CY19 Result Analysis (INR Crores) Q4FY19 Q4FY18 YoY (%) Q3FY19 QoQ (%) FY19 FY18 YoY (%)
Volumes (Nos) 11,93,590 10,45,378 14.2% 12,59,828 -5.3% 50,19,503 40,06,791 25.3%
Realization (Rs) 61,958 64,937 -4.6% 58,812 5.3% 60,265 62,940 -4.3%
Net sales 7,395 6,788 8.9% 7,409 -0.2% 30,250 25,219 19.9%
COGS 5,345 4,697 13.8% 5,397 -1.0% 21,824 17,410 25.4%
Employee Expenses 313 267 17.1% 317 -1.4% 1,255 1,069 17.4%
Other Expenses 586 502 16.8% 548 7.0% 2,218 1,926 15.2%
Calculated EBITDA 1,173 1,338 -12.3% 1,165 0.7% 5,012 4,862 3.1%
D&A 61 88 -30.8% 63 -4.0% 266 315 -15.6%
Other income 433 352 23.1% 470 -7.9% 1,649 1,293 27.5%
EBIT 1,112 1,250 -11.0% 1,101 1.0% 4,746 4,547 4.4%
Interest Expense 0.3 0.3 -3.3% 3.6 -91.9% 4.5 1.3 242.0%
Exceptional Income/(Expense) 342 0 - 0 342 -32 -
PBT 1,876 1,594 17.7% 1,559 20.3% 6,703 5,783 15.9%
Tax 570 514 11.0% 457 24.7% 2,028 1,714 18.3%
PAT 1,306 1,080 20.9% 1,102 18.5% 4,675 4,068 14.9%
Adj. PAT (adjusted exceptional items) 964 1,080 -10.8% 1,102 -12.6% 4,333 4,100 5.7%
EPS in INR 45 37 20.9% 38 18.4% 162 141 14.9%

Margin Analysis Q4FY19 Q4FY18 YoY (%) Q3FY19 QoQ (%) FY19 FY18 YoY (%)
Material Expenses % Net Sales 72.3% 69.2% 3.1% 72.8% -0.6% 72.1% 69.0% 3.1%
Gross Margin 27.7% 30.8% -3.1% 27.2% 0.6% 27.9% 31.0% -3.1%
Employee Expenses % Net Sales 4.2% 3.9% 0.3% 4.3% 0.0% 4.2% 4.2% -0.1%
Other Expenses % Net Sales 7.9% 7.4% 0.5% 7.4% 0.5% 7.3% 7.6% -0.3%
Calculated EBITDA Margin (%) 15.9% 19.7% -3.8% 15.7% 0.1% 16.6% 19.3% -2.7%
Tax Rate (%) 30.4% 32.2% -1.8% 29.3% 1.1% 30.3% 29.6% 0.6%
PAT Margin (%) 17.7% 15.9% 1.7% 14.9% 2.8% 15.5% 16.1% -0.7%

Other Highlights
• As of 31st March 2019, the cash & equivalents stood at Rs. 16,368 crores vs. Rs. 15,542 crores on 31st March 2018.
• The investment in Bajaj Holdings was a strategic move and a one time action.
• The company is absolutely on track to meet the BS6 deadlines, but, not disclosed the launch date of BS6 vehicles.
• Other income was higher led by an increase in the investment income.
• The realization & margins declined for the quarter as well as for the year was due to focus on lower CC motorcycles to gain the
market share, and the company was successful in it. The higher spends on brand building exercise also impacted part of the
margins.
• Exceptional Items: The profits includes Rs. 342 crores as an exceptional income. The company earlier provided for NCCD
expenses, however, its now reversed post favourable judgement of the Honourable Supreme Court. FY18 has an exceptional
expense of Rs. 32 crores was related to a one-time support to dealers for any losses incurred post introduction of GST.
Volume Breakup (No.) Q4FY19 Q4FY18 YoY (%) Q3FY19 QoQ (%) FY19 FY18 YoY (%)
Domestic:
Motorcycles 6,10,094 4,97,587 22.6% 6,44,093 -5.3% 25,41,320 19,74,577 28.7%
CV 1,02,258 1,22,229 -16.3% 91,018 12.3% 3,99,453 3,69,637 8.1%
Total Domestic 7,12,352 6,19,816 14.9% 7,35,111 -3.1% 29,40,773 23,44,214 25.4%
%tage of total volumes 59.7% 59.3% 0.4% 58.4% 1.3% 58.6% 58.5% 0.1%

Exports:
Motorcycles 3,91,889 3,58,802 9.2% 4,34,291 -9.8% 16,95,553 13,94,757 21.6%
CV 89,349 66,760 33.8% 90,426 -1.2% 3,83,177 2,67,820 43.1%
Total Exports 4,81,238 4,25,562 13.1% 5,24,717 -8.3% 20,78,730 16,62,577 25.0%
%tage of total volumes 40.3% 40.7% -0.4% 41.6% -1.3% 41.4% 41.5% -0.1%

Total Volumes:
Motorcycles 10,01,983 8,56,389 17.0% 10,78,384 -7.1% 42,36,873 33,69,334 25.7%
%tage of total volumes 83.9% 81.9% 2.0% 85.6% -1.7% 84.4% 84.1% 0.3%

CV 1,91,607 1,88,989 1.4% 1,81,444 5.6% 7,82,630 6,37,457 22.8%

%tage of total volumes 16.1% 18.1% -2.0% 14.4% 1.7% 15.6% 15.9% -0.3%
Total 11,93,590 10,45,378 14.2% 12,59,828 -5.3% 50,19,503 40,06,791 25.3%
Source: Company, NSPL Research
HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED
Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 Bajaj Auto | Q4FY19 - Result Update | Page 4
Bajaj Auto’s Volume Projections

Volume Projections (in units) FY17 FY18 FY19 FY20E FY21E

Domestic Sales 22,54,538 23,44,214 29,40,773 32,61,791 35,52,955

YoY Growth (%) 4.0% 25.4% 10.9% 8.9%

Two-Wheelers 20,01,391 19,74,577 25,41,320 28,19,170 30,72,269

YoY Growth (%) -1.3% 28.7% 10.9% 9.0%

Three Wheelers 2,53,147 3,69,637 3,99,453 4,42,621 4,80,686

YoY Growth (%) 46.0% 8.1% 10.8% 8.6%

Export Sales 14,11,333 16,62,577 20,78,730 23,79,403 26,02,150

YoY Growth (%) 17.8% 25.0% 14.5% 9.4%

Two Wheelers 12,18,541 13,94,757 16,95,553 18,95,833 20,41,753

YoY Growth (%) 14.5% 21.6% 11.8% 7.7%

Three Wheelers 1,92,792 2,67,820 3,83,177 4,83,570 5,60,397

YoY Growth (%) 38.9% 43.1% 26.2% 15.9%

Segment wise Volume Breakup (in units) FY17 FY18 FY19 FY20E FY21E

Two-Wheelers 32,19,932 33,69,334 42,36,873 47,15,003 51,14,023

YoY Growth (%) 4.6% 25.7% 11.3% 8.5%

Three-Wheelers 4,45,939 6,37,457 7,82,630 9,26,191 10,41,082

YoY Growth (%) 42.9% 22.8% 18.3% 12.4%

Total No. of Units 36,65,871 40,06,791 50,19,503 56,41,194 61,55,105

YoY Growth (%) 9.3% 25.3% 12.4% 9.1%

Blended Realization (Rs/unit) 59,377 62,806 60,265 62,242 65,747

YoY Growth (%) 5.8% -4.0% 3.3% 5.6%

%tage of total units sold FY17 FY18 FY19 FY20E FY21E

Two-wheeler 87.8% 84.1% 84.4% 83.6% 83.1%

Three-wheeler 12.2% 15.9% 15.6% 16.4% 16.9%

Source: Company, NSPL Research

We reiterate that Bajaj Auto can recover & grow faster than the industry majorly due to:
Bajaj has launched many new variants in 2Ws and filled up the required product gaps to regain its lost market share. Buyers are
moving towards higher CC bikes, where Bajaj is the market leader and have a wide variety of options. We believe this trend of
premiumization should continue and expect robust growth in the domestic motorcycles, led by Pulsars, Dominar, Platina series and
upcoming new launches in the near term.

The export market has clearly emerged out after the commodity and oil price run-up. Moreover, to reduce the dependency from
Africa, Bajaj Auto has entered into ASEAN and LATAM countries. The sales from these new countries have increased. Overall, expects
a decent set of growth in the coming years from exports.

We continue to see higher growth in FY20E as we expect pre-buying in the 2nd half of FY20E before the implementation of BS6 and
expects higher realization in FY21E as the prices post BS6 will shoot up.

The street concerns about a demand slowdown led by higher cost of ownership, however, we believe once BS6 kicks in, there are
high chances that the Government will reduce the GST from 28% to 18%. This we believe is possible as 2Ws is not a luxury product
and to push the demand higher, the government’s support is utmost needed.

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED

Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 Bajaj Auto | Q4FY19 - Result Update | Page 5
Story in Charts

Gradually Rising Domestic Market Share (%)

80.0

67.0

66.4

65.6
65.5

64.3
64.3
63.7

62.4
61.3

60.4
59.8

59.7
70.0

57.5
56.0

60.0 55.9
50.0

40.0
24.7 23.5
30.0
18.6 18.7 18.6 23.5 23.8
17.8 17.8 17.8 18.0 18.3 19.3
17.1 17.0
20.0

10.0 17.5 18.3 18.7

1.4 12.0 14.0 15.5 15.8 15.7 16.3
8.2 9.3 9.8
0.0
Mar-16

May-16

Mar-17

Mar-18

Mar-19
Jan-16

Jan-17

May-17

Jan-18

May-18

Jan-19
Sep-15

Sep-16

Sep-17

Sep-18
Nov-15

Jul-16

Nov-16

Jul-17

Nov-17

Jul-18

Nov-18
Goods Carriers Passenger Carrier Motorcycles

Sustained High Double Digit Volume Growth Realization Performance

7.2%
16,00,000 48.0% 66,000 8.0%
5.9%
38.1% 65,000 6.0%
14,00,000 4.4% 4.2%
32.7% 38.0% 64,000
4.0%
12,00,000 63,000
25.0% 25.8%
28.0% 2.0%
10,00,000 62,000 -0.3%
17.6% -2.7%
Numbers

61,000 0.0%
14.2%
INR

58,810
8,00,000 18.0%
8,88,434

60,000 -2.0%
6,00,000 -4.4%
3.9% 59,000
8.0% -4.0%
4,00,000 58,000
-7.8%
10,45,378
10,71,510

10,01,469

12,26,641

13,39,444

12,59,828

11,93,590

-6.0%
-2.0% 57,000
61,254

61,282

63,786

64,790

61,045

59,628

61,956
2,00,000 -10.6% -8.0%
56,000
0 -12.0% 55,000 -10.0%
Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19
Volumes (Nos) Volume Growth (%) Realization (Rs) Realization Growth (%)

Superior YoY Revenue Growth Healthy EBITDA Margin

9,000 45.0% 1,600 21.4% 22.0%
38.3% 37.6%
8,000 40.0%
1,400 20.5% 20.6% 21.0%
35.0%
7,000 19.8%
26.1% 30.0% 1,200 19.6%19.8% 20.0%
6,000
1,173

21.6%
1,156

25.0% 1,000
INR Crores

INR Crores

18.5% 19.0%
5,000 16.0% 20.0%
5,442

800
4,000 9.2% 15.0% 18.0%
8.4% 17.2% 17.3%
10.0% 600
3,000 16.8%
5.0% 17.0%
400
2,000 15.9%
-5.3% 0.0% 15.6% 16.0%
6,388
6,566

6,773

7,488

7,987

7,409

1,176

1,296

1,044

1,298

1,250

1,338

1,281

1,343
7395

1,000 200
906

938

-5.0%
0 -10.0% 0 15.0%
Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Net Revenues Net Revenue Growth (%) Calculated EBITDA EBITDA Margin (%)

Source: Company, NSPL Research

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED
Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 Bajaj Auto | Q4FY19 - Result Update | Page 6

Profit & Loss (INR Crores) FY17 FY18 FY19 FY20E FY21E
Net Revenues 21,767 25,165 30,250 35,112 40,468
COGS 14,624 17,410 21,824 25,256 29,043
Employee Expenses 997 1,069 1,255 1,427 1,621
Other Expenses 1,745 1,926 2,218 2,448 2,785
EBITDA 4,422 4,783 4,982 5,981 7,019
D&A 307 315 266 304 322
Other income 1,222 1,347 1,649 1,862 2,099
EBIT 5,337 5,816 6,366 7,539 8,796
Interest Expense 1 1 4 4 4
PBT 5,336 5,783 6,703 7,534 8,791
Tax 1,508 1,714 2,028 2,279 2,660
PAT 3,828 4,068 4,675 5,255 6,132
EPS in INR 132 141 162 182 212

Balance Sheet (INR Crores) FY17 FY18 FY19 FY20E FY21E

ASSETS
Non-Current Assets
(a) Property, plant and equipment 1,899 1,821 1,689 2,141 2,288
(b) Capital work-in-progress 11 11 12 12 13
(c) Investment property 59 57 56 56 56
(d) Intangible assets 45 0 20 0 0
(e) Intangible assets under development 32 45 36 0 0
(f) Investment in subsidiaries 1,223 1,223 1,223 1,223 1,223
(g) Financial assets 7,488 10,631 16,392 19,026 21,929
(h) Income tax assets (net) 400 439 584 657 766
(i) Other non-current assets 268 357 307 356 410
Total Non-Current Assets 11,424 14,584 20,318 23,471 26,685
Current Assets
(a) Inventories 728 743 962 1,113 1,280
(b) Financial assets
(i) Investments 6,050 5,765 1,576 1,830 2,109
(ii) Trade receivables 953 1,492 2,560 2,886 3,215
(iii) Cash and cash equivalents 280 761 905 941 1,329
(iv) Other bank balances 14 17 17 17 17
(v) Loans 6 6 6 7 8
(c) Other financial assets 263 79 113 131 151
(d) Other current assets 1,096 372 923 1,071 1,235
Total Current Assets 9,391 9,236 7,053 7,997 9,345
Total Assets 20,815 23,819 27,380 31,467 36,030

EQUITY AND LIABILITIES

Equity
(a) Equity Share capital 289 289 289 289 289
(b) Other equity 16,745 18,814 21,491 24,643 28,138
Total Equity 17,034 19,104 21,780 24,933 28,428
LIABILITIES
Non-current liabilities
(a) Financial liabilities 120 121 125 144 167
(b) Provisions 78 112 15 17 20
(c) Deferred tax liabilities (net) 314 323 543 630 727
(d) Government grant 49 47 44 51 59
(e) Other non-current liabilities 7 1 1 1 2
Total Non - Current Liabilities 568 604 727 844 974
Current liabilities
(a) Financial liabilities
(i) Trade payables 2,236 3,244 3,787 4,428 5,172
(ii) Other financial liabilities 280 329 371 431 497
(b) Other current liabilities 558 394 557 647 746
(c) Provisions 121 126 141 163 188
(d) Government grant 3 3 3 3 4
(e) Current tax liabilities (net) 16 16 16 18 21
Total Current Liabilities 3,213 4,111 4,874 5,691 6,629
Total Equity and Liabilities 20,815 23,819 27,380 31,467 36,030
Source: Company, NSPL Research

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED

Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 Bajaj Auto | Q4FY19 - Result Update | Page 7

Cash Flow (INR Crores) FY17 FY18 FY19 FY20E FY21E

Profit Before Tax 5,336 5,783 6,703 7,534 8,791

Operating Profit before Working Capital Changes 4,616 4,924 6,755 7,627 8,895

Cash Generated from Operations 4,842 5,946 5,672 7,789 9,113

Less: income tax paid -1,503 -1,685 -2,028 -2,279 -2,660

Cash Flow from Operating 3,339 4,261 3,644 5,510 6,453

(Incr)/ Decr in Gross PP&E -199 -183 -143 -701 -470

Cash Flow from Investing -3,688 -1,918 -1,762 -3,372 -3,428

Dividends Paid (including tax on dividend) -202 -1,885 -1,737 -2,102 -2,637

Finance costs -1 0 0 0 0

Cash Flow from Financing -190 -1,885 -1,737 -2,102 -2,637

Incr/(Decr) in Balance Sheet Cash -539 458 145 36 388

Cash at the Start of the Year 818 280 761 906 941

Cash at the End of the Year 280 761 906 941 1,329

RATIOS FY17 FY18 FY19 FY20E FY21E

Growth (%)

Net Revenues -3.6% 15.6% 20.2% 16.1% 15.3%

EBITDA -7.5% 8.2% 4.2% 20.1% 17.3%

PAT -2.6% 6.3% 14.9% 12.4% 16.7%

Profitability

Return on Capital (%) 31.3% 30.4% 29.2% 30.2% 30.9%

Return on Equity (%) 22.5% 21.3% 21.5% 21.1% 21.6%

Margin Trend

EBITDA Margin (%) 20.3% 19.0% 16.5% 17.0% 17.3%

Net profit Margin (%) 17.9% 16.5% 15.8% 15.3% 15.5%

Solvency

Total Debt / Equity 0.0 0.0 0.0 0.0 0.0

Net Debt / Equity 0.0 0.0 0.0 0.0 0.0

Valuation Ratios

P/E 19.7 20.9 18.8 16.8 14.4

EV/EBITDA 17.0 17.6 17.5 14.6 12.3

Source: Company, NSPL Research

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED

Vaibhav Chowdhry Amit Hiranandani 310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@ amit.hiranandani@ +91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com
 OUR RECENT REPORTS

NOCIL Ltd. JK Cement Ltd. Suprajit Engineering Ltd. Cummins India Ltd.

Dalmia Bharat Coromandel International Meghmani Organics IndoStar Capital

Minda Industries Sharda Cropchem Heidelberg Cements Manappuram Finance

For more research reports, please visit www.nalandasecurities.com

 Bajaj Auto| Q4FY19 - Result Update | Page 9

Bajaj Auto Rating Legend

Date CMP (INR) Target Price (INR) Recommendation Strong Buy More than 15%

May 18, 2019 3,042 3,445 Buy Buy 5% - 15%

January 31, 2019 2,499 2,903 Strong Buy Hold 0 – 5%

October 25, 2018 2,475 2,978 Strong Buy Reduce -5% - 0

Sell Less than -5%

Disclaimer:
This report has been prepared by Nalanda Securities Pvt. Ltd(“NSPL”) and published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India
(Research Analysts) Regulations, 2014, for use by the recipient as information only and is not for circulation or public distribution. NSPL includes subsidiaries, group and associate
companies, promoters, directors, employees and affiliates. This report is not to be altered, transmitted, reproduced, copied, redistributed, uploaded, published or made available to
others, in any form, in whole or in part, for any purpose without prior written permission from NSPL. The projections and the forecasts described in this report are based upon a
number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it
can be expected that one or more of the estimates on which the projections are forecasts were based will not materialize or will vary significantly from actual results and such
variations will likely increase over the period of time. All the projections and forecasts described in this report have been prepared solely by authors of this report independently.
None of the forecasts were prepared with a view towards compliance with published guidelines or generally accepted accounting principles.
This report should not be construed as an offer to sell or the solicitation of an offer to buy, purchase or subscribe to any securities, and neither this report nor anything contained
therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. It does not constitute a personal recommendation or take into account
the particular investment objective, financial situation or needs of individual clients. The research analysts of NSPL have adhered to the code of conduct under Regulation 24 (2) of
the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The recipients of this report must make their own investment decisions, based on their own
investment objectives, financial situation or needs and other factors. The recipients should consider and independently evaluate whether it is suitable for its/ his/ her/their particular
circumstances and if necessary, seek professional / financial advice as there is substantial risk of loss. NSPL does not take any responsibility thereof. Any such recipient shall be
responsible for conducting his/her/its/their own investigation and analysis of the information contained or referred to in this report and of evaluating the merits and risks involved in
securities forming the subject matter of this report. The price and value of the investment referred to in this report and income from them may go up as well as down, and investors
may realize profit/loss on their investments. Past performance is not a guide for future performance. Actual results may differ materially from those set forth in the projection.
Except for the historical information contained herein, statements in this report, which contain words such as ‘will’, ‘would’, etc., and similar expressions or variations of such words
may constitute ‘forward‐looking statements’. These forward‐looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ
materially from those suggested by the forward‐looking statements. Forward‐looking statements are not predictions and may be subject to change without notice. NSPL undertakes
no obligation to update forward‐looking statements to reflect events or circumstances after the date thereof. NSPL accepts no liabilities for any loss or damage of any kind arising out
of use of this report.
This report has been prepared by NSPL based upon the information available in the public domain and other public sources believed to be reliable. Though utmost care has been
taken to ensure its accuracy and completeness, no representation or warranty, express or implied is made by NSPL that such information is accurate or complete and/or is
independently verified. The contents of this report represent the assumptions and projections of NSPL and NSPL does not guarantee the accuracy or reliability of any projection,
assurances or advice made herein. Nothing in this report constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or
appropriate to recipients’ specific circumstances. This report is based / focused on fundamentals of the Company and forward‐looking statements as such, may not match with a
report on a company’s technical analysis report. This report may not be followed by any specific event update/ follow‐up.

Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter;
Disclosure of Interest Statement
• NSPL is a Stock Broker registered with BSE, NSE and MCX ‐ SX in all the major
segments viz. Cash, F & O and CDS segments. Further, NSPL is a Registered
Details of Nalanda Securities Pvt. Limited (NSPL)
Portfolio Manager and is registered with SEBI
• SEBI Registration Number: INH000004617
Details of Disciplinary History of NSPL No disciplinary action is / was running / initiated against NSPL
Research analyst or NSPL or its relatives'/associates' financial interest in No (except to the extent of shares held by Research analyst or NSPL or its
the subject company and nature of such financial interest relatives'/associates')
Whether Research analyst or NSPL or its relatives'/associates' is holding
NO
the securities of the subject company
Research analyst or NSPL or its relatives'/associates' actual/beneficial
ownership of 1% or more in securities of the subject company, at the
NO
end of the month immediately preceding the date of publication of the
document
Research analyst or NSPL or its relatives'/associates' any other material
NO
conflict of interest at the time of publication of the document
Has research analyst or NSPL or its associates received any compensation
NO
from the subject company in the past 12 months
Has research analyst or NSPL or its associates managed or co‐managed
NO
public offering of securities for the subject company in the past 12 month
Has research analyst or NSPL or its associates received any compensation
for investment banking or merchant banking or brokerage services from NO
the subject company in the past 12 months
Has research analyst or NSPL or its associates received any compensation
for products or services other than investment banking or merchant
NO
banking or brokerage services from the subject company in the past 12
months
Has research analyst or NSPL or its associates received any compensation
or other benefits from the subject company or third party in connection NO
with the document.
Has research analyst served as an officer, director or employee of the
NO
subject company
Has research analyst or NSPL engaged in market making activity for the
NO
subject company
Other disclosures NO

HEAD OF RESEARCH ANALYST NALANDA SECURITIES PRIVATE LIMITED

Vaibhav Chowdhry Amit Hiranandani Vaibhav Digitally signed by Vaibhav Chowdhry
DN: c=IN, o=Personal, postalCode=400067, st=Maharashtra,
2.5.4.20=c44ae119d8d0e0355f921ec5b5b16b20a503a0432064c67c6686fe
4e91a20b4c, pseudonym=e92965821e484f5b8fe916fd5d5cc70d,
2.5.4.45=03490030313030303833393179797257546B49504165786241425
310-311 Hubtown Solaris, NS Phadke Marg, Opp Teli Gali, Andheri East, Mumbai 69
vaibhav.chowdhry@
Chowdhry
4325432536445687348654E414F7143435666764B736A563434646170724

amit.hiranandani@ 87746626669336267322B49685841484D7A38,
serialNumber=9d8b3451c82c6d07db54ced05db1c660f14016eb7623697f2
3fea259e7e71187, cn=Vaibhav Chowdhry
Date: 2019.05.18 14:02:43 +05'30'
+91-22-6281-9649 | [email protected] | www.nalandasecurities.com
nalandasecurities.com nalandasecurities.com