BAJAJ AUTO Fundamental Analysis

BYSagir Kazi

SUBMITTED TO:- Prof.Nitin Tikke

Overview

• Founded in 1926 by Jamnalal Bajaj.• His son, Kamalnayan Bajaj, then 27, took over

the reins of business in 1942.• The present Chairman of the group, Rahul Bajaj,

took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Auto the flagship company has gone up from Rs.72 million to Rs.100.76 billion (USD 2.3 billion).

Company Profile• Bajaj is India's second largest motorcycle

maker, smaller than Honda Motorcycle Scooter India, but larger than TVS Motor Co. Ltd.

• Bajaj Auto, is ranked as the world’s fourth largest two- and three- wheeler manufacturer.

• The company is well known for their R&D, product development, process engineering and low-cost manufacturing skills.

Board of Directors• Chairman - Rahul Bajaj • Vice Chairman - Madhur Bajaj • Managing Director - Rajiv Bajaj • Executive Director - Sanjiv Bajaj • Company Secretary   - J Sridhar

Shareholding Pattern• Distribution of shareholding according to size

class as on 31 March 2010

Price History• Monthly highs and lows of Bajaj Auto Limited shares

during 2009-10 (Rs.) vis-a-vis BSE Sensex

Price Volume Chart

Research and Development (R&D)

• 2009-10 was an important year. Bajaj Auto’s R&D departments were involved with the creation of number of new products.

• Pulsar 220 F• Pulsar 180 UG• Pulsar 150 UG• Pulsar 135 LS• Discover DTS-si

CompetitorsThere are 3 major competitors in Three Wheeler

Industry

• Hero Honda• Bajaj Auto• TVS

BALANCE SHEET OF BAJAJ AUTO

Sources Of Funds Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Total Share Capital 101.18 101.18 144.68 144.68 144.68

Equity Share Capital 101.18 101.18 144.68 144.68 144.68

Reserves 4,669.55 5,433.14 1,442.91 1,725.01 2,783.66

Net worth 4,770.73 5,534.32 1,587.59 1,869.69 2,928.34

Secured Loans 0.02 22.46 6.95 0.00 12.98

Unsecured Loans 1,467.13 1,602.97 1,327.39 1,570.00 1,325.60

Total Debt 1,467.15 1,625.43 1,334.34 1,570.00 1,338.58

Total Liabilities 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92

Application Of Funds Mar '06 Mar '07 Mar '08 Mar '09 Mar '10Gross Block 2,894.22 3,178.54 2,994.68 3,350.20 3,379.25

Less: Accum. Depreciation 1,761.22 1,904.94 1,726.07 1,807.91 1,899.66

Net Block 1,133.00 1,273.60 1,268.61 1,542.29 1,479.59

Capital Work in Progress 43.33 107.62 34.74 106.48 120.84

Investments 5,856.97 6,447.53 1,857.14 1,808.52 4,021.52

Inventories 272.93 309.70 349.61 338.84 446.21

Sundry Debtors 301.55 529.83 275.31 358.65 272.84

Cash and Bank Balance 80.84 62.16 54.74 135.68 100.20

Total Current Assets 655.32 901.69 679.66 833.17 819.25

Loans and Advances 2,282.98 2,925.24 1,099.68 1,567.09 2,291.29

Fixed Deposits 1.25 21.32 1.33 1.19 1.21

Total CA, Loans & Advances 2,939.55 3,848.25 1,780.67 2,401.45 3,111.75

Current Liabilities 1,419.08 1,683.46 1,185.19 1,378.20 2,218.06

Provisions 2,315.89 2,833.79 834.04 1,224.15 2,248.72

Total CL & Provisions 3,734.97 4,517.25 2,019.23 2,602.35 4,466.78

Net Current Assets -795.42 -669.00 -238.56 -200.90 -1,355.03

Miscellaneous Expenses 0.00 0.00 0.00 183.30 0.00

Total Assets 6,237.88 7,159.75 2,921.93 3,439.69 4,266.92

Contingent Liabilities 719.06 811.66 1,129.29 924.96 818.25

Book Value (Rs) 471.49 546.96 109.73 129.23 202.40

PROFIT AND LOSS ACCOUNT

Income Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Sales Turnover 8,653.83 10,741.91 9,856.66 9,310.24 12,420.95

Excise Duty 1,081.70 1,321.67 1,029.51 610.07 607.70

Net Sales 7,572.13 9,420.24 8,827.15 8,700.17 11,813.25

Other Income 458.96 567.16 170.27 -4.52 38.76

Stock Adjustments 49.01 -0.90 67.85 -24.49 47.60

Total Income 8,080.10 9,986.50 9,065.27 8,671.16 11,899.61

Expenditure

Raw Materials 5,446.62 6,969.50 6,760.04 6,502.10 8,187.11

Power & Fuel Cost 59.09 79.34 69.20 60.89 70.35

Employee Cost 282.45 310.07 350.09 366.67 411.76

Other Manufacturing Expenses 79.50 74.53 53.72 58.10 73.80

Selling and Admin Expenses 299.99 457.17 390.15 383.41 423.87

Miscellaneous Expenses 198.52 230.89 209.63 226.22 221.94

Preoperative Exp Capitalised -24.81 -32.05 -23.04 -14.42 -15.67

Total Expenses 6,341.36 8,089.45 7,809.79 7,582.97 9,373.16

Operating Profit 1,279.78 1,329.89 1,085.21 1,092.71 2,487.69

PBDIT 1,738.74 1,897.05 1,255.48 1,088.19 2,526.45

Interest 0.34 5.34 5.16 21.01 5.98

PBDT 1,738.40 1,891.71 1,250.32 1,067.18 2,520.47

Depreciation 191.00 190.26 173.96 129.79 136.45

Other Written Off 3.62 0.39 1.12 0.00 0.00

Profit Before Tax 1,543.78 1,701.06 1,075.24 937.39 2,384.02

Extra-ordinary items 59.03 26.60 59.32 18.72 24.25

PBT (Post Extra-ord Items) 1,602.81 1,727.66 1,134.56 956.11 2,408.27

Tax 479.11 490.09 378.78 301.61 707.50

Reported Net Profit 1,101.63 1,237.96 755.95 656.48 1,702.73

Total Value Addition 894.74 1,119.95 1,049.75 1,080.87 1,186.05

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 404.74 404.73 289.37 318.30 578.73

Corporate Dividend Tax 56.76 68.78 49.18 54.10 96.12

Per share data (annualised)

Shares in issue (lakhs) 1,011.84 1,011.84 1,446.84 1,446.84 1,446.84

Earning Per Share (Rs) 108.87 122.35 52.25 45.37 117.69

Equity Dividend (%) 400.00 400.00 200.00 220.00 400.00

Book Value (Rs) 471.49 546.96 109.73 129.23 202.40

Analysis & Interpretation• Net sales and other operating income grew by 35% to

over Rs.119 billion.• Company’s operating EBITDA grew by 116% to almost

Rs.26 billion. Operating earnings before interest, taxes, depreciation and amortization (EBITDA) was 21.7% of net sales and other operating income.

• Operating profit before tax (PBT) grew by 170% to almost Rs.23 billion, and was over 19% of net sales and other operating income.

• Profit after tax (PAT) grew by 160% to Rs.17 billion

• Bajaj Auto standalone 2009-10 has been a record year for Bajaj Auto in terms of highest ever sales, exports, profits and margins.

• The year saw record sales of 2.85 million units – over 2.5 million motorcycles and 340,937 three-wheelers.

• Surplus cash and cash equivalents in the Company’s balance sheet as on 31 March 2010 stood at Rs.32.6 billion, versus Rs.9.3 billion on 31 March 2009.

RATIO ANALYSIS

LEVERAGE RATIOS

• Debt-equity Ratio

Debt 1338.58 = = 0.435

Equity (144+2928)

• Debt-asset Ratio

Debt 1338.58 = = 0.313

Assets 4266.92

• Interest Coverage Ratio

Profit before interest and tax 2384.02 = = 3.23

Interest 707.5

TURNOVER RATIOS

• Inventory TurnoverCost of goods sold 12420.95Average inventory (446.21 + 338)/2

• Debtors’ TurnoverNet credit sales Average debtors

• Fixed Assets Turnover Net sales Average net fixed assets

• Total Assets Turnover Net sales

Average total assets

= =29.19

=37.41

=3.50

=2.77

LIQUIDITY RATIOS

• Current Ratio

Current assets 1355.03Current liabilities 2218.06

• Acid-Test Ratio

Quick assets (1355.03-135)Current liabilities 2218.06

• Cash Ratio

Cash and bank Current balances investments (100.2 +4021.52)

Current liabilities 2218.06

= = 0.61

= = 0.55

+= = 1.858

PROFITABILITY RATIOS

• Gross Profit Margin Ratio

Gross profit 2384

Net sales 11813.25

• Net Profit Margin Ratio

Net profit 1702.73

Net sales 11813.25

• Return on Assets (ROA)

Profit after tax 1702.73

Average total assets (3439.69 + 4266.92)/2

= = 20.1%

= = 14.41%

= =44.1%

PROFITABILITY RATIOS

• Earning Ratio

Profit before interest and tax 2384.02

Average total assets (3439.69 + 4266.92)/2

• Return on Capital Employed

Profit before interest and tax (1 – Tax rate) 2384.02(1 – 0.054)

Average total assets ((3439.69 + 4266.92)/2

• Return on Equity

Equity earnings 578.73

Average equity

=61.8%

= 58.5%

= 0.131 or 13.1 percent

=

=

=

VALUATION RATIOS Price-earnings Ratio

Market price per share 1550.5 = = 13.24

Earnings per share 117.69

Market Value to Book Value RatioMarket value per share 2850.75 = = 14.1Book value per share 202.4