shares overview auto industries auto shares Bajaj Auto

The management indicated that while the African market continued its growth trajectory, other markets have also started looking up. However, the sharp jump in numbers is also partly due to the low base effect. For December 2008 quarter, total volumes (including 3-wheelers) had fallen 31 per cent yearon-year to 494,000 units.

The super two-wheeler ride powered the company to almost triple post-tax profits to Rs 475 crore in December quarter over last year as sales went up this quarter by about 55 per cent year-on-year to Rs 3,323 crore.

The leverage of its fixed costs on higher volumes propped operating margins to 22 per cent, a 60 basis points expansion over September 2009 quarter, even as inputs costs trended up. Improving demand also meant that the company could take the call of raising prices of Discover 100 cc and Platina (done recently), which should provide some cushion.

Going ahead, Bajaj Auto should clock in 25-30 per cent domestic volume growth for 2009-10 and about 26 per cent for 2010-11 even as the industry grows at about 14-15 per cent domestically, adjusting for the lower base, according to Kevin D’Sa, VP, Finance, Bajaj Auto.

The company, which currently has a 27 per cent market share, is aiming for the 3435 per cent share it enjoyed a few years ago.

A lot of these expectations are hinged around the performance of its upcoming launches and the recently launched Pulsar 135 priced at around Rs 55,000.

The company is looking to expand its Discover offerings which is targeted at the commuter segment and D’Sa, observes that he expects the over Rs 40,000 segment will show higher growth than the others.

The company is looking to expand its Discover offerings which is targeted at the commuter segment and D’Sa, observes that he expects the over Rs 40,000 segment will show higher growth than the others.

The spate of new launches means that the current high operating margins may be difficult to sustain as sales and promotional expenses trend up.

Firm metal prices and change in product-mix (higher share of sub-125 cc bikes) may also affect margins going ahead. With Q4 being seasonally slower than Q3, margins are expected to stay in the range of 19-21 per cent and average over 20 per cent for 2009-10.

The industry has seen an inflexion and analysts are raining earnings upgrades with Bajaj Auto seeing 8 in the current month (6 post results). At Rs 1,703.95, the stock trades at 14 times its consensus (upgraded) analyst’ 2010-11 EPS estimate of Rs 121.09.

The stock has had a great run with a return of nearly 300 per cent in the last one year and continued strong numbers in the March 2010 quarter could be a trigger with adverse forex movements and any surges in raw materials being the downside risks.
source - BS

Bajaj Auto Ltd (updated - 13 May 2010)
It is easily one of the strongest quarters for Bajaj Auto. The company witnessed strong volume growth during the March quarter, with consistent sales of over 3,00,000 vehicles in March and April. It was in September 2006 last when the company had managed to sell over 3,00,000 vehicles. At that time, the company depended largely on entry-level bikes, which constituted around 60 per cent of its portfolio then (30 per cent at present). This has made earnings predictable, with earnings before interest, tax, depreciation and amortisation (Ebitda) margins consistently over 19 per cent.

The company recorded Ebitda margins of 22.9 per cent during the March 2010 quarter. They were 21.7 per cent for the financial year 2010. While average price realisations have remained the same at Rs 40,000 per vehicle during the year, the company managed to cut employee costs and other selling costs by 9 per cent and 10 per cent, respectively. The growth of 84.4 per cent in motorcycle sales in April happened at a time when Hero Honda and TVS saw their volumes decline 10.4 per cent and 1.4 per cent, respectively. One of the major attributes of Bajaj Auto’s better performance has been the successful launch of three products — Pulsar 220cc (variant), Discover 100cc and Pulsar 135cc. Analysts reckon that this has a huge bearing, as generally only one out of five motorcycles launched is a success. Its overall market share has now grown to 24.3 per cent in FY10, as compared to the 21.9 per cent in the previous year. The company is expected to raise its capacity to 3,50,000 motorcycles by September 2010, which will continue to give it revenue traction.

Launches in the executive segment, which contributes around 60 per cent to total motorcycle sales in India, are expected to strengthen its portfolio. Hero Honda is the major player in this segment. However, analysts expect Ebitda margins to cool as commodity prices rise. Moreover, at current levels, there is little room for the company to expand its margins.

Hero Honda, after a dismal April due to a strike at the battery plant, is expected to see sales pick up in May. The action in the two-wheeler segment is set to remain on the fast track.
source - business standard

Bajaj Auto Ltd (updated - 15 Jan 2010)
Bajaj Auto is reaping the dividends of the India demographic paradigm as sales have leaped ahead, debunking all apprehensions of lower rural spend because of a deficient monsoon.

After a rough patch in second half of 2008-09 and early this fiscal, volume growth has started to look up. The December 2009 quarter was amongst its best in more than two years and saw total volumes rise by a strong 64 per cent to 809,000 vehicles, aided by Discover 100cc which was launched around August 2009.

For the quarter, Bajaj’s domestic bike sales were up 19 per cent sequentially and about 72 per cent year-onyear. Exports which have been under pressure given the global slowdown also surprised, ticking up 22 per cent over last quarter.

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Bottom line benefited further from financial gains and lower depreciation costs. Net profit increased 70 per cent y-o-y to `682 crore.

The company recently raised prices effective October, indicating its ability to pass on the higher raw material costs in the current demand environment. Analysts suggest margins have peaked and there isn’t much elbowroom left, but are cautious about the competitive scenario in the motorcycle segment, as well as sustained growth momentum in the medium term. However, volume growth is expected to remain intact.

The Hero Honda split will augur well for Bajaj, says IIFL analyst Jatin Chawla, as HMSI (Honda’s wholly owned subsidiary) will have to scale up distribution network before making its presence felt. In October, Bajaj commissioned its second plant at Pantnagar, which will increase its manufacturing capacity by 1.5 million motorcycles a year by the end of 2010-11. This will help the company meet additional demand.

Bajaj Auto Ltd (updated - 21 Oct 2010)
Bajaj auto recorded 50 per cent year-on-year (y-o-y) growth in sales at around `4,200 crore during the September quarter. With a change in the sales mix (driven by higher threewheeler and Pulsar sales), volumes increased 46 per cent y-o-y, while net realisation rose nearly three per cent to `41,785 per vehicle. Also, marginally lower raw material costs buoyed operating margins by 70 basis points sequentially to 20.7 per cent.