Fundamental Analysis of Bajaj Auto Ltd

WELCOME

FUNDAMENTAL

ANALYSIS OF

BAJAJ AUTO LTD.

OBJECTIVE OF STUDY To find out the real value of Bajaj auto

ltd. Shares.

To suggest whether to BUY/HOLD/SELL shares

RESEARCH METHODOLOGY

Secondary data collection

Economic environment Industry analysis Company analysis Projected P/L ac Calculation of intrinsic

value.

CONTENTS

ECONOMIC ANALYSIS GDP

INFLATION

INFRASTRUCTURE

BUDGET

INFRASTRUCTURE - For 2011-12, an allocation of over Rs2,14,000 crore is being made for this sector, which is 23.3% higher than previous year.

BUDGET - In this budget, the automobile sector has been granted full exemption from basic customs duty and SAD and concessional CVD @5% is being extended to specified parts of the hybrid vehicles, namely, battery pack, battery chargers, AC/DC electric motors and motor controllers. The concession is subject to actual user condition and will be available till 31.03.2013.

INDUSTRY ANALYSIS PRODUCTION

SALES

COMPETITON

PRODUCTION TRENDAutomobile Production Trends (Number

of Vehicles)

Category 2003-04 2004-05 2005-06 2006-072007-08 2008-09 2009-10

Passenger Vehicles

989,560 1,209,876 1,309,300 1,545,223 1,777,583 1,838,593 2,351,240

Commercial Vehicles

275,040 353,703 391,083 519,982 549,006 416,870 566,608

Three Wheelers

356,223 374,445 434,423 556,126 500,660 497,020 619,093

Two Wheelers

5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,419,792 10,512,889

Grand Total

7,243,564 8,467,853 9,743,503 11,087,997 10,853,930 11,172,275 14,049,830

SALES TREND

Automobile Domestic Sales Trends(Number

of Vehicles)

Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Passenger Vehicles

902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,949,776

Commercial Vehicles

260,114 318,430 351,041 467,765 490,494 384,194 531,395

Three Wheelers

284,078 307,862 359,920 403,910 364,781 349,727 440,368

Two Wheelers

5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231

Grand Total

6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,292,770

COMPETITION

COMPANY ANALYSIS NON- FINANCIAL

FACTORS

R&D PERFORMANCE

HIGHLIGHTS PRODUCT VARITIES.

FINANCIAL FACTORS

EPS ROI ROA

NON-FINANCIAL FACTORS

R&D – It has developed 4V DTS-i technology, which gives excellent fuel economy, used in PULSAR 135 LS.

It has added a world class NVH( noise, vibration & harshness) laboratory.

PULSAR 150 UG- Best seller bikes, upgraded with more powerful engine and new features.

PERFORMANCE HIGHLIGHTS 2009-10 :- It was a record year of Bajaj auto –

Highest ever sales, exports, profits & margins.

Net sales and other operating income grew by 35% to Rs.119.21 billion

PRODUCTS

FINANCIAL FACTORS2006 2007 2008 2009 2010

EPS

108.87 122.35 52.25 45.37 117.69

ROI

23.09 22.36 47.61 38.92 58.14

ROA

11.05 546.96 109.73 116.56 202.40

PROJECTED P/L AC2008-09 2009-10 2010-11 Projected 2011-12

Net Sales 8,827.15 8,700.17 11,813.25 16,750.00

Raw Materials 6,760.04 6,502.10 8,187.11 11,832.20

Employee Cost 350.09 366.67 411.76 435.09

Operating profit

1,085.21 1,092.71 2,487.69 3,483.70

PBT 1,075.24 937.39 2,384.02 3,512.22

Tax 378.78 301.61 707.50 978.71

PAT 755.95 656.48 1,702.73 2,533.51

EPS 52.25 45.37 117.69 175.11

Shareholders(in lakhs)

1,446.84 1,446.84 1,446.84 1,446.84

CALCULATION OF INTRINSIC VALUE Intrinsic value = Projected EPS X Projected P-E ratio Rs.(175.11 x 14.56 ) = Rs. 2,549.60 /-

Current market value = Rs.1,361.75 (as on 18.3.2011)

As RV > MP = Shares are underpriced.

Rs.2,549.60 > Rs.1,361.75

CONCLUSION

DECISION