Bajaj Auto October 23, 2019 - ICICI Directcontent.icicidirect.com/mailimages/IDirect_BajajAuto_Q3FY20.pdf · marketing costs. Upcoming BS-VI cost push, persistent volume weakness

ICIC

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Retail E

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Result

Update

October 24, 2019

CMP: | 3,150 Target: | 3,300 (5%) Target Period: 12 months

Bajaj Auto (BAAUTO)

HOLD

Margin surprise highlight of steady quarter…

Bajaj Auto (BAL) reported a relatively healthy set of Q3FY20 numbers. Net

revenues at | 7,640 crore were up 3.1% YoY with blended ASPs at

| 63,532/unit. Total volumes were at 12.0 lakh units (down 4.6% YoY), with

2-W volumes (10.3 lakh units) down 4.7% YoY, 3-W volumes (1.8 lakh units)

down 3.3% YoY. Total exports (5.6 lakh units) were up 7.3% YoY with export

revenues at US$426 million. EBITDA margins came in at 17.9% (up 131 bps

QoQ), with a sequential improvement driven by 60 bps gross margin

expansion along with 80 bps reduction in other expenses as a percentage of

sales. Consequent reported PAT grew 14.5% YoY to | 1,262 crore.

Dominant exports share hedge against domestic 2-W pain

The domestic 2-W space has been bearing the brunt of the slowdown in

discretionary consumption spending recently as illustrated by (i) decisive

underperformance vis-à-vis PV category in Q3FY20 (14.9% YoY 2-W de-

growth vs. 0.5% YoY PV de-growth), (ii) elevated dealer inventory (~35 days

vs. ~25 days for PV as per FADA at end of December) (iii) and continuing

soft retail demand. BS-VI products rolled out thus far by other OEMs are

~15% costlier than outgoing BS-IV versions. This fails to enthuse us about

swiftness in recovery, going forward, save for some possible pre-buying

impact in Q4FY20E. While BAL’s domestic performance is broadly similar to

industry, exports remain healthy (industry exports up 6.8% YoY vs. BAL

exports up 8.8% YoY on YTD basis; BAL market share at 52.8%) - and are a

key differentiator vs. rest of the 2-W pack. Given potential of lower BS-VI

cost increase (~| 6,500/unit vs. ~| 7,500/unit) compared to ones announced

by competition, potential to gain incremental market share stands improved.

We build in 6.4% volume CAGR for the company over FY20E-22E.

Margin pressures in place; modest recovery up ahead

EBITDA margins have climbed down from heady ~19-20% seen over FY16-

18, impacted by volume downturn, high marketplace discounts and elevated

marketing costs. Upcoming BS-VI cost push, persistent volume weakness

and slight deterioration in product mix (introduction of 125 cc Pulsar) limits

scope for quick margin rebound going ahead, in our view. Reversal of softer

commodity prices complicates matters further. We build in 16.7%, 15.5%,

16.0% margins for FY20E, FY21E, FY22E, respectively.

Valuation & Outlook

For BAL, sales, PAT are expected to grow at 9.6%, 6.0% CAGR, respectively,

in FY20E-22E. We value BAL at unchanged target price of | 3,300 using

SOTP method (implied P/E at 17.1x FY22E EPS) and retain HOLD on the

stock. Robust market leadership in exports justifies its premium valuation

vs. its domestic-heavy peers in our opinion. BAL’s cash rich B/S, healthy

cash flow generation (present CFO yield at ~6%) also provide comfort.

Key Financials FY18 FY19 FY20E FY21E FY22E CAGR (FY20E-22E)

Net Sales 25,164.9 30,250.0 31,017.6 34,823.7 37,241.7 9.6%

EBITDA 4,783.4 4,982.0 5,185.2 5,394.6 5,941.4 7.0%

EBITDA Margins (%) 19.0 16.5 16.7 15.5 16.0

Net Profit 4,068.1 4,675.1 4,956.4 5,063.5 5,569.9 6.0%

EPS (|) 140.6 161.6 171.3 175.0 192.5

P/E 22.4 19.5 18.4 18.0 16.4

RoNW (%) 21.5 19.9 20.3 18.7 18.5

RoCE (%) 22.9 21.0 19.7 24.4 24.3

Key Financial Summary

Source: ICICI Direct Research, Company

Particulars

Particular | crore

Market Capitalization 91,151.6

Total Debt (FY19) 104.5

Cash & Liquid Invests (FY19) 19,598.5

EV 74,017.5

52 week H/L (|) 3290 / 2400

Equity capital (|) 289.4

Face value (|) | 10

Key Highlights

Revenues rise 3.1% YoY in Q3FY20

despite 4.6% decline in overall

volumes to 12.0 lakh units

Gross margin expansion, lower other

expense aid sequential margin

expansion to 17.9%

Exports portfolio key strength on 2-W

front, acting as hedge against

ongoing domestic 2-W slowdown

Cost increases, high competition and

sluggish volumes to pressurise

margins in near to medium term

Maintain HOLD with unchanged

target price of | 3,300/share, valuing

core business at 16.5x FY22E EPS

Research Analyst

Shashank Kanodia, CFA

[email protected]

Jaimin Desai

[email protected]

ICICI Securities | Retail Research 2

ICICI Direct Research

Result Update | Bajaj Auto

Exhibit 1: Variance Analysis

Q3FY20 Q3FY20E Q3FY19 YoY (%) Q2FY20 QoQ (%) Comments

Total Operating Income 7,640 7,646 7,409 3.1 7,707 -0.9 Topline in line with our estimates

Raw Material Expenses 5,342 5,348 5,397 -1.0 5,437 -1.7 RM to sales came in on expected lines at 70% of sales

Employee Expenses 348 336 317 9.9 338 2.9

Other Expenses 592 671 548 8.1 663 -10.6Savings were realised in other expenses, which for the

quarter was at 7.8% of sales vs. our estimate of 8.8%

EBITDA 1,367.2 1,298.7 1,156.0 18.3 1,278.1 7.0

EBITDA Margin (%) 17.9 17.0 15.6 229 bps 16.6 131 bpsEBITDA margins came in ahead at 17.9%, primarily tracking

lower other expenses

Other Income 366.2 413.6 470.0 -22.1 393.4 -6.9

Depreciation 61.7 64.6 63.4 -2.7 61.3 0.6

Interest 0 1 4 NA 1 NA

Total Tax 410 486 457 -10.4 206 98.4 Tax rate for the quarter at 24.5%

Reported PAT 1261.6 1160.8 1101.9 14.5 1402.4 -10.0

EPS (|) 43.6 40.1 38.1 14.5 48.5 -10.0PAT came in ahead of our estimates tracking higher EBITDA

margins and lower effective tax rate

Key Metrics

Revenue (| crore)

Domestic 4,399 4,436 4,494 -2.1 4,544 -3.2

Exports 3,037 3,023 2,749 10.5 2,955 2.8 Segmental revenues broadly in line with our estimates

Blended ASP (|/ unit)

Domestic 68,765 69,349 61,133 12.5 72,239 -4.8Decline in domestic ASPs largely on account of change in

product mix

Exports 53,972 53,723 52,392 3.0 54,265 -0.5

Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

FY22E

(| Crore) Old New % Change Old New % Change Introduced Comments

Revenue 31,680 31,018 -2.1 35,301 34,824 -1.4 37,242Marginally tweak our forward estimates. Introduce FY22E

numbers. We expect revenues to grow at a CAGR of 9.6%

EBITDA 5,160 5,185 0.5 5,790 5,395 -6.8 5,941

EBITDA Margin (%) 16.3 16.7 43 bps 16.4 15.5 -91 bps 16.0

Increase our margin estimates for FY20E, tracking upbeat

performance in 9MFY20. Lower estimates for FY21E tracking

increase in commodity prices and changing product mix

PAT 5,063 4,956 -2.1 5,470 5,063 -7.4 5,570

EPS (|) 175.0 171.3 -2.1 189.0 175.0 -7.4 192.5 Expect PAT to grow at CAGR of 6.0% over FY20-22E

FY20E FY21E


Exhibit 3: Assumptions

Comments

Units (mn) FY18 FY19 FY20E FY21E FY22E FY20E FY21E

Motorcycle volumes 3.4 4.2 4.1 4.3 4.7 4.2 4.4

Three-Wheeler volumes 0.6 0.8 0.7 0.8 0.8 0.7 0.7

Quadricycle volumes 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total volumes 4.0 5.0 4.8 5.1 5.4 4.9 5.1

Expect total vehicle volumes to grow at CAGR of 6.4%

over FY20-22E. Amid muted consumer sentiment

domestically and impending price hike due to BS-VI

transition, forward growth will be lead by exports

growing at CAGR of 9.4% over aforesaid period

Export volumes 1.7 2.1 2.2 2.4 2.6 2.2 2.3

Domestic revenues (| crore) 15,396 18,099 18,243 21,013 22,157 19,019 21,931

Export revenues ($ mn) 1,400 1,642 1,689 1,813 1,969 1,680 1,762

US$INR Realisation rate 67 70 71 72 72 71 71

Export ASP ($/unit) 872 790 774 759 754 777 761

Blended ASP (|/unit) 62,640 58,905 62,903 67,120 66,840 63,343 66,955

Blended ASPs set to increase tracking changing

product mix and price hike due to BS-6 transition. ASPs

expected to increase at CAGR of 4.3% in FY19-22E

EarlierCurrent





Conference call highlights

BS-VI preparedness

In the sub-125 cc segment, BAL’s indigenously developed electronic injection system (EIS) technology should

cost | 6,500/unit vs. ~| 7,500/unit for fuel injection system (FIS) technology being adopted by peers. EIS does

away with fuel pump and injects air instead for ignition purposes. EIS also offers easy serviceability vs. FIS units

BAL has started B-VI production, with entire transition slated to be completed by the middle of February 2020

Margins

One-third of margin increase QoQ in Q3FY20 can be attributed to forex gains while two-third is on account of

commodity price tailwinds and favourable product mix. Also, EBITDA margins optically look higher due to change

in accounting treatment of advertisement and promotion activities wherein all price incentives/schemes related

expense being subtracted off from topline with expense related to advertisement expense being charged to other

expenses head. Consequently, in Q3FY20, the share of promotional schemes was higher than advertisement

spending

Going forward, some headwinds on the margins front persist largely owing to a reversal in commodity prices and

increasing share of low margin domestic 2-W segment in the overall revenue pie. The company is also expected

to resort to some price hikes in Q4FY20

Domestic business

In the domestic 2-W market, underlying demand remains weak. While in the domestic 3-W market some state

specific schemes helped in offtake of volumes in the passenger auto domain

Pulsar 125 response was been robust. The product has witnessed down trading from higher cc motorcycle

segment as well as migration of customers from scooter segment

Present dealer inventory is comfortably placed at five weeks

Exports business

Exports outlook is steady, with the segment expected to deliver low double digit growth in the near term

Nigeria, East Africa and Philippines have been particularly well performing markets for the company while

Bangladesh was somewhat flat and Nepal as well as Sri-Lanka declined

BAL has commenced exports of 3-W to Egypt starting January 2020 (stalled since April 2019) and is currently

exporting close to 3,000-4,000 units/month

Electric vehicles

On the electric vehicle front, response from recently launched Chetak scooter has been very robust. However, the

company sees this as a beginning and remains non-committal on future volumes. As of January 15, 2020, total

bookings for Chetak were at 2,000 units

On the electric 3-W space, the company does not see lithium ion 3-W as a big addressable market and is

progressing slowly in this domain

Others

Financing is not an issue for Bajaj Auto’s customers with 60% of 2-W at Bajaj Auto being financed, of which 80%

is financed by Bajaj Finance

Spare parts revenue was at | 770 crore, of which exports revenues were at | 200 crore




Financial story in charts

Exhibit 4: Total operating income trend

20,150

21,612

22,587

21,767

25,165

30,250

31,018

34,824

37,242

1

7

5

-4

16

20

3

12

7

(5)

-

5

10

15

20

25

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E

(%

)

(| crore)

Revenue % increase


Exhibit 5: Revenue mix

12,255

13,774

14,816

15,396

18,099

18,243

21,013

22,157

9,758

9,772

7,879

9,703

11,468

11,979

12,962

14,176

44.3

41.5

34.7

38.7 38.8 39.6

38.2 39.0

20

25

30

35

40

45

50

-

5,000

10,000

15,000

20,000

25,000

FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E

Domestic Exports % share of exports


Exhibit 6: Per vehicle metrics and estimates

44,427

61,842

22,000

27,000

32,000

37,000

42,000

47,000

52,000

57,000

62,000

67,000

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY20

Q2FY20

Q3FY20

(|)

Avg RM Cost Avg realisation


We expect total operating income to grow at a

CAGR of 9.6% over FY20E-22E. It includes volume

growth CAGR of 6.4% and ASP CAGR of 4.3% over

the aforesaid period (largely on account of BS-VI

related price increases)

Product mix expected to evolve in favour of exports

given continued weakness in domestic 2-W space

where previous trend of BAL’s outperformance has

come off

ASPs for the quarter were at ~| 61,842/unit




Exhibit 7: EBITDA trend and margin profile

4,106

4,117

4,782

4,422

4,783

4,982

5,185

5,395

5,941

20.4

19.0

21.220.3

19.0

16.5 16.7

15.5 16.0

-

5

10

15

20

25

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000


(%

)

(| crore)

EBITDA EBITDA margin


Exhibit 8: Profitability trend

3,243

2,814

3,930

3,828

4,068

4,675

4,956

5,063

5,570

16.1

13.0

17.4 17.6

16.215.5

16.0

14.515.0

-

2

4

6

8

10

12

14

16

18

20

-

1,000

2,000

3,000

4,000

5,000

6,000


(%

)

(| crore)

PAT PAT margin


Exhibit 9: Model-wise domestic 2-W volumes for Q3FY20

40%

1%25%

29%

0%2%

3%

Total domestic volumes - 5.42 lakh units

Pulsar

Discover

CT

Platina

Dominar

Avenger

KTM

Source: SIAM, ICICI Direct Research

Exhibit 10: Model-wise export 2-W volumes for Q3FY20

15%

8%

15%

2%0%

0%

2%

58%

Total export volumes - 4.84 lakh units

Pulsar

Discover

CT

Platina

Dominar

Avenger

KTM

Boxer


EBITDA margins are seen softening towards 16%

levels on the back of BS-VI price hikes, intense

market competition and reversal in key input prices

PAT is seen growing at 6.0% CAGR over FY20E-22E

to | 5,570 crore




Exhibit 11: Segment-wise, model-wise motorcycle volume break-up for Q3FY20


During Q3FY20, newly launched Pulsar 125 provided the only

material source of volume growth domestically. This appeared

to cannibalise Pulsar 150. However, the two models taken

together growing 4.8% YoY to 1.72 lakh units. Pulsar 125

exports, however, were encouraging

Elsewhere domestically, 23.7% YoY decline in entry level

segment (up to 110 cc) was disappointing. CT, Discover and

Platina de-grew 24.4%, 81.5% and 18.3%, respectively

On the overall exports front, Boxer continued to lead the charge

Q3FY19 Q3FY20 YoY % Q3FY19 Q3FY20 YoY % Q3FY19 Q3FY20 YoY %

MOTORCYCLES 644,093 542,978 (15.7) 434,291 484,183 11.5 1,078,384 1,027,161 (4.7) 18.7

75-110cc 392,377 299,408 (23.7) 275,070 294,039 6.9 667,447 593,447 (11.1)

Discover 16,001 2,964 (81.5) 9,720 8,173 (15.9) 25,721 11,137 (56.7)

CT 181,283 137,049 (24.4) 44,160 41,014 (7.1) 225,443 178,063 (21.0)

Boxer - - NA 206,178 236,020 14.5 206,178 236,020 14.5

Platina 195,093 159,395 (18.3) 15,012 8,832 (41.2) 210,105 168,227 (19.9)

110-125cc 9,374 74,931 699.3 58,378 73,238 25.5 67,752 148,169 118.7

Pulsar - 68,317 100.0 136 7,718 5,575.0 136 76,035 55,808.1

Discover 6,503 168 (97.4) 29,615 28,720 (3.0) 36,118 28,888 (20.0)

Boxer - - NA 4,608 3,948 (14.3) 4,608 3,948 (14.3)

Platina - - NA 2,796 1,032 (63.1) 2,796 1,032 (63.1)

CT - - NA 18,821 30,768 63.5 18,821 30,768 63.5

V 12 - - NA - - NA - - NA

KTM 2,871 6,446 124.5 2,402 1,052 NA 5,273 7,498 NA

125-150cc 167,394 103,713 (38.0) 62,328 65,485 5.1 229,722 169,198 (26.3)

V 15 2,768 - (100.0) 56 - (100.0) 2,824 - (100.0)

Discover - - NA - - NA - - NA

Boxer - - NA 35,566 40,068 12.7 35,566 40,068 12.7

Pulsar 164,626 103,713 (37.0) 26,706 25,417 (4.8) 191,332 129,130 (32.5)

150-200cc 44,635 41,504 (7.0) 28,556 37,348 30.8 73,191 78,852 7.7

Pulsar 31,266 25,427 (18.7) 25,027 34,173 36.5 56,293 59,600 5.9

KTM 6,261 5,769 (7.9) 3,328 2,767 (16.9) 9,589 8,536 (11.0)

Avenger 7,108 10,308 45.0 201 408 103.0 7,309 10,716 46.6

200-250cc 28,562 21,289 (25.5) 6,136 9,000 46.7 34,698 30,289 (12.7)

KTM 1,132 1,381 22.0 606 1,743 187.6 1,738 3,124 79.7

Avenger 6,643 2,657 (60.0) 550 471 (14.4) 7,193 3,128 (56.5)

Pulsar 20,787 17,251 (17.0) 4,980 6,786 36.3 25,767 24,037 (6.7)

350-500cc 1,751 2,110 20.5 3,823 5,073 32.7 5,574 7,183 28.9

Dominar 853 1,297 52.1 868 2,015 132.1 1,721 3,312 92.4

KTM 898 813 (9.5) 2,955 3,058 3.5 3,853 3,871 0.5

500-800cc - 23 100.0 - - NA - 23 100.0

KTM - 23 100.0 - - NA - 23 100.0

Total domestic 644,093 542,978 (15.7) 18.7

Total exports 434,291 484,183 11.5

Total 2-W volumes 1,078,384 1,027,161 (4.7) 12.0

Domestic market share %

(YTD December 2019)

Domestic Exports Total




Exhibit 12: Valuation Summary

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)

FY18 25,164.9 15.6 140.6 6.3 22.4 15.8 21.5 22.9

FY19 30,250.0 20.2 161.6 14.9 19.5 14.9 19.9 21.0

FY20E 31,017.6 2.5 171.3 6.0 18.4 13.8 20.3 19.7

FY21E 34,823.7 12.3 175.0 2.2 18.0 12.8 18.7 24.4

FY22E 37,241.7 6.9 192.5 10.0 16.4 11.2 18.5 24.3

Source: Bloomberg, ICICI Direct Research

Exhibit 13: SOTP valuation

SOTP Valuation Estimated

value

Per share (|) Remark

Core Business

FY22E EPS (|) 192.5

Multiple (x) 16.5 Largely inline with long period average

Value per share (|) 3,175

Stake in KTM (48%)

KTM value derived back to Bajaj (| crore) 3660 3.0x of Invested Capital (| 1220 crore)

Value per share 125

Total Value per Share (|) 3,300


Exhibit 14: BAL currently trades at ~16.4x its FY22E EPS

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Jan-10

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Jul-10

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Jan-14

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Apr-19

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Oct-19

Jan-20

(|)

Price 22x 21x 19x 17x 15x 13x 12x





Exhibit 15: Recommendation history vs. consensus

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan-20

Dec-19

Dec-19

Nov-19

Oct-19

Aug-19

Jul-19

Jul-19

Jun-19

May-19

Apr-19

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

Oct-18

Sep-1

8

Aug-18

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Jun-18

May-18

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Dec-17

Nov-17

Oct-17

Sep-1

7

Aug-17

Jul-17

Jun-17

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Apr-17

Mar-17

Feb-17

(%)

(|)

Price Idirect target Consensus Target Mean % Consensus with HOLD


Exhibit 16: Top 10 shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)

1 BAJAJ HOLDINGS AND I 30-06-2019 33.43 96.73M 0

2 JAMNALAL SONS PVT LT 24-09-2019 8.95 25.90M +0.05M

3 LIFE INSURANCE CORP 30-06-2019 4.60 13.32M 0

4 JAYA HIND INDUSTRIES 30-06-2019 3.35 9.70M 0

5 MAHARASHTRA SCOOTERS 30-06-2019 2.34 6.77M 0

6 BAJAJ SEVASHRAM LIMI 30-06-2019 1.54 4.46M 0

7 NORGES BANK 31-12-2018 1.38 4.00M 0

8 BACHHRAJ & CO LTD 30-06-2019 1.26 3.64M 0

9 SBI FUNDS MANAGEMENT 31-12-2019 1.14 3.29M +0.08M

10 GOVERNMENT PENSION F 30-06-2019 1.09 3.17M -0.97M


Exhibit 17: Shareholding pattern

(in %) Dec-18 Mar-19 Jun-19 Sep-19 Dec-19

Promoter 49.3 51.2 53.5 53.5 53.5

FII 16.1 15.6 15.7 14.1 13.9

DII 8.2 7.4 7.5 9.8 10.1

Others 26.4 25.8 23.3 22.6 22.5





Financial Summary

Exhibit 18: Profit and loss statement | crore

(Year-end March) FY19 FY20E FY21E FY22E

Total operating Income 30250.0 31017.6 34823.7 37241.7

Growth (%) 14.1 2.5 12.3 6.9

Raw Material Expenses 21,824.4 21,958.7 25,151.6 26,757.0

Employee Expenses 1,255.4 1,394.6 1,547.4 1,654.7

Other expenses 2,218.3 2,511.4 2,766.4 2,927.4

Total Operating Expenditure 25,268.0 25,832.4 29,429.1 31,300.3

EBITDA 4982.0 5185.2 5394.6 5941.4

Growth (%) -14.3 4.1 4.0 10.1

Depreciation 265.7 248.1 278.6 297.9

Interest 4.5 2.7 0.8 0.6

Other Income 1,649.3 1,567.9 1,654.2 1,803.5

PBT 6,361.1 6,502.2 6,769.3 7,446.3

Total Tax 2,028.0 1,545.8 1,705.9 1,876.5

PAT 4675.1 4956.4 5063.5 5569.9

Growth (%) 14.9 6.0 2.2 10.0

EPS (|) 161.6 171.3 175.0 192.5


Exhibit 19: Cash flow statement | crore


Profit after Tax 4,675.1 4,956.4 5,063.5 5,569.9

Add: Depreciation 265.7 248.1 278.6 297.9

(Inc)/dec in Current Assets -1,871.0 -236.8 -589.0 -374.2

Inc/(dec) in CL and Provisions 557.4 38.7 486.7 309.2

CF from operating activities 3836.7 5043.8 5332.9 5869.4

(Inc)/dec in Investments -1,571.1 -2,250.0 -2,400.0 -2,750.0

(Inc)/dec in Fixed Assets -142.8 -315.0 -315.0 -315.0

Others 22.0 -95.0 -95.0 -95.0

CF from investing activities -1691.8 -2660.0 -2810.0 -3160.0

Inc/(dec) in loan funds 3.8 -20.0 -20.0 -20.0

Dividend paid & dividend tax -2,083.5 -2,257.1 -2,430.7 -2,604.3

Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0

CF from financing activities -1999.8 -2293.8 -2465.5 -2639.0

Net Cash flow 145.1 90.0 57.4 70.4

Opening Cash 777.8 922.9 1,012.9 1,070.3

Closing Cash 922.9 1012.9 1070.3 1140.7


Exhibit 20: Balance Sheet | crore


Liabilities

Equity Capital 289.4 289.4 289.4 289.4

Reserve and Surplus 21,490.5 24,175.9 26,794.6 29,746.2

Total Shareholders funds 21779.9 24465.2 27084.0 30035.5

Total Debt 124.5 104.5 84.5 64.5

Deferred Tax Liability 542.7 542.7 542.7 542.7

Other non-current liabilities 1.1 1.1 1.1 1.1

Total Liabilities 22506.7 25182.0 27790.8 30732.4

Assets

Gross Block 4,637.8 4,929.3 5,229.3 5,529.3

Less: Acc Depreciation 2,893.6 3,141.8 3,420.3 3,718.3

Net Block 1,744.2 1,787.5 1,809.0 1,811.0

Capital WIP 11.5 20.0 20.0 20.0

Total Fixed Assets 1755.7 1807.5 1829.0 1831.0

Investments 19,159.4 21,459.4 23,909.4 26,709.4

Inventory 961.5 1,019.8 1,144.9 1,224.4

Debtors 2,559.7 2,719.4 3,053.0 3,265.0

Loans and Advances 6.3 6.5 7.3 7.8

Other current assets 1035.8 1054.6 1184.0 1266.2

Cash 922.9 1012.9 1070.3 1140.7

Total Current Assets 5,486.3 5,813.1 6,459.5 6,904.1

Creditors 3,786.7 3,824.1 4,293.3 4,591.4

Provisions 140.6 142.0 159.4 170.5

Other current liabilities 575.4 590.0 662.4 708.3

Total Current Liabilities 4,873.7 4,947.0 5,526.1 5,901.3

Net Current Assets 612.6 866.1 933.4 1002.9

Deferred Tax asset 0.0 0.0 0.0 0.0

Application of Funds 22506.7 25182.0 27790.8 30732.4


Exhibit 21: Key ratios


Per share data (|)

EPS 161.6 171.3 175.0 192.5

Cash EPS 170.7 179.9 184.6 202.8

BV 752.7 845.5 936.0 1,038.0

DPS 60.0 65.0 70.0 75.0

Cash Per Share 31.9 35.0 37.0 39.4

Operating Ratios (%)

EBITDA Margin 16.5 16.7 15.5 16.0

PBT / Net sales 15.6 15.9 14.7 15.2

PAT Margin 15.5 16.0 14.5 15.0

Inventory days 11.6 12.0 12.0 12.0

Debtor days 30.9 32.0 32.0 32.0

Creditor days 45.7 45.0 45.0 45.0

Return Ratios (%)

RoE 21.0 19.7 24.4 24.3

RoCE 19.9 20.3 18.7 18.5

RoIC 101.9 100.6 102.2 111.1

Valuation Ratios (x)

Core P/E 21.0 18.4 18.0 16.4

EV / EBITDA 14.9 13.8 12.8 11.2

EV / Net Sales 2.4 2.3 2.0 1.8

Market Cap / Sales 3.0 2.9 2.6 2.4

Price to Book Value 4.2 3.7 3.4 3.0

Solvency Ratios

Current Ratio 1.0 1.1 1.1 1.1

Quick Ratio 0.8 0.8 0.8 0.8





Exhibit 22: ICICI Direct coverage universe (Auto & Auto Ancillary)

Sector / Company CMP M Cap

(|) TP(|) Rating (| Cr) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E

Apollo Tyre (APOTYR) 171 180 Hold 9510 11.9 10.3 12.0 14.4 16.5 14.2 7.5 7.5 6.3 8.0 5.8 6.7 8.3 5.7 6.3

Ashok Leyland (ASHLEY) 84 75 Hold 23249 6.8 3.9 4.1 12.4 21.3 20.7 7.1 10.9 10.2 26.9 14.5 14.2 24.3 13.9 13.1

Bajaj Auto (BAAUTO) 3150 3300 Hold 91152 161.6 171.3 175.0 19.5 18.4 18.0 14.9 13.8 12.8 21.0 19.7 24.4 19.9 20.3 18.7

Bharat Forge (BHAFOR) 502 450 Hold 20485 22.2 18.5 18.8 22.6 27.1 26.8 11.4 14.0 13.4 17.9 13.2 13.2 19.1 14.4 13.8

Eicher Motors (EICMOT) 20442 22215 Hold 58273 808.1 848.2 1007.4 25.3 24.1 20.3 19.3 20.4 16.0 32.5 25.7 26.5 24.8 21.5 21.1

Escorts (ESCORT) 780 810 Hold 9555 39.6 39.5 43.3 19.7 19.8 18.0 12.6 12.8 11.5 21.7 18.1 17.4 15.6 14.2 13.4

Exide Industries (EXIIND) 203 230 Buy 16150 9.9 11.2 12.7 20.4 18.1 15.9 11.2 9.8 8.5 18.4 18.8 19.2 12.9 14.3 14.6

Hero Moto (HERHON) 2489 3110 Buy 53919 169.5 195.0 182.9 14.7 12.8 13.6 10.0 10.5 9.7 37.1 30.1 29.8 26.3 23.9 23.0

M&M (MAHMAH) 571 680 Buy 71484 38.6 46.2 34.5 14.8 12.4 16.6 10.2 10.1 10.1 17.3 14.7 13.2 14.1 12.1 10.3

Maruti Suzuki (MARUTI) 7000 5850 Sell 211456 248.3 201.4 227.7 28.2 34.8 30.7 16.0 21.8 19.0 16.3 8.7 9.7 16.3 12.3 12.9

Tata Motors (TATMOT) 189 175 Hold 54330 -84.6 -2.3 8.9 -2.2 -82.5 21.2 4.0 4.0 3.5 5.4 7.7 8.9 7.1 0.0 10.8

RoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)

Source: Reuters, ICICI Direct Research




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ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




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