Bajaj Auto Ltd

Buy
Annual Report Analysis Bajaj Auto Target Price
28th Aug 2023 Auto 5,400

Diversified Business Model with Sound Balance Sheet; Exports Recovery (CMP as of 25th Aug, 2023)
Impending!
CMP (Rs) 4,608
Summary Upside /Downside (%) 17%
FY23 for Bajaj Auto was characterised by strong domestic sales but weak exports, which
High/Low (Rs) 4,989/3,462
continued to weigh on overall sales. Despite lower sales volumes, revenue grew YoY due to
higher ASPs during the year, which was led by price increases, higher share of 3W, and higher Market cap (Cr) 1,29,837
share of 125cc+ in the sales mix. The management continued to focus on the EV and premium Avg. daily vol. (6m) Shrs. 4,05,765
motorcycle and as a result, Capex stood higher in FY23. The company also raised additional
capital of Rs 465 Cr in CTL through a rights issue. It has a strong balance sheet with a robust No. of shares (Cr) 28
cash and liquidity position of Rs 17,445 Cr in FY23 (cash surplus of Rs 19,500 Cr as of Q1FY24),
even after the announced buyback of Rs 3,094 Cr and dividend payout of Rs 4,051 Cr in FY23. Shareholding (%)
Dec-22 Mar-23 Jun-23
Key Highlights Promoter 55.0 55.0 55.0
 Financial Review: In FY23, the company’s revenue grew 9% YoY to a record level of Rs FII 11.8 12.4 13.7
37,609 Cr. This was led by higher realised prices (up 21% Y oY), despite lower total sales
Mutual Funds / 3.9 3.6 3.8
volume of 39.3 Lc units, which was down 9% YoY. ASP increased on account of price hikes,
UTI
recovery in domestic sales with a higher share of the 125cc+ segment, and higher 3W sales, Financial 0.0 0.0 0.0
though it was partially offset by lower exports. EBITDA grew by 25% YoY to Rs 6,551 Cr led Institutions
by topline growth and lower RM costs. Gross margins and EBITDA margins improved by Others 29.3 29.1 27.6
188/210bps YoY to 28% and 18%. PAT grew to Rs 5,628 Cr, up 12% YoY and was led by
higher EBITDA. The company offered a payout ratio of ~72% in FY23, which implies a Financial & Valuations
dividend yield of ~3%. Y/E Mar (Rs Cr) FY24E FY25E FY26E
 Operational review: The company sold a total of 39.27 Lc units in FY23, reporting a decline Net Sales 44,113 51,857 57,447
of 9% YoY. The lower volumes were on account of 27% YoY de-growth in exports which
EBITDA 8,472 10,023 11,107
declined to 18.2 Lc units. This was, however, partially offset by strong domestic sales
recovery which stood at 21 Lc units, up 17% YoY. The said recovery was led by a pull from Adj. Net Profit 7,120 8,245 9,029
domestic demand for both 2W and 3W. EPS (Rs.) 251.9 291.7 319.4
 Strategies implemented: The company’s strategic focus is on strengthening its competitive PER (x) 18.3 15.8 14.4
position in the 125cc segment. It upgraded the Pulsar models across segments through re- EV/EBITDA (x) 15.3 12.8 11.3
imagined design and re-engineering to deliver superior performance. For the commuter
P/BV (x) 4.8 4.4 4.0
segment, it launched Platina 110cc ABS – a first-in-segment feature that provides better
stability and control. For EVs, FY23 was a critical year as the company invested in a 2W EV ROE (%) 24.6 26.6 26.6
plant, augmented R&D and expanded network touchpoints. To reduce single-source supply
dependency, it developed/onboarded multiple vendors during the year. Change in Estimates (%)
 Key competitive strengths: a) Growing strength in the Domestic 125cc motorcycles Y/E Mar FY23 FY24E FY25E
segment; b) Established player in the overseas 2W market; c) Leadership in the 3W 0.0% 0.0% 0.0%
Sales
passenger carrier segment, and d) Sound financial risk profile.
EBITDA 0.0% 0.0% 0.0%
 Key growth drivers: In FY23, Bajaj spent a total Capex of ~Rs 1,000 Cr (including Chetak
PAT 0.0% 0.0% 0.0%
Technology), the highest amongst the Capex spent so far, primarily to set up capacities of its
electric vehicle (EV) facilities for two and three-wheelers and ramping up its premium
motorcycle volumes. The company’s focus is on further developing its EV portfolio and ESG disclosure Score**
building a premium motorcycle portfolio with new launches from Triumph each year. For
Environmental Disclosure 16.46
FY24, Bajaj Auto plans to invest Rs 1,000 Cr which includes Rs 500 Cr for the EV segment.
Social Disclosure Score 26.96
Outlook & Recommendation Governance Disclosure 84.86
Bajaj Auto’s focus on the 125cc+ segment is in line with the changing industry dynamics, where Score
the share of commuter motorcycles is declining (~60% of total domestic sales in FY16, coming Total ESG Disclosure 42.81
down to 50% in FY23). The company through its exclusive dealership networks for KTM, Bajaj Score
Sector Average 46.43
Motorcycles, Chetak Electric, and 3-wheelers offers differentiated customer experience and
Source: Bloomberg, Scale: 0.1-100
preserves brand value. The recent Triumph launch will also be marketed through the exclusive **Note: This score measures the amount of ESG data a company
reports publicly and does not measure the company's performance on
Triumph network, and we expect it to plug the gap in the portfolio. The company has robust any data point. All scores are based on 2022 disclosures
domestic IC engine franchise, however, export pickup, and establishing market share through
successful EV-2W/3W launches will be the key monitorable for the stock. We maintain our BUY
rating on the stock and continue to value the stock using 17x P/E on core Jun’25E EPS plus Relative performance
PMAG stake and cash reserves at 1x book value. 250
Key Financials (Standalone)
Y/E March (Rs. cr) FY23 FY24E FY25E FY26E 150
Net Sales 35,756 44,113 51,857 57,447
EBITDA 6,021 8,472 10,023 11,107
50
Adj. Net Profit 5,737 7,120 8,245 9,029 Jan-22 Jul-22 Jan-23 Jul-23
EPS (Rs.) 201.2 251.9 291.7 319.4 Bajaj Auto Ltd.
RoE (%) 20.4 24.6 26.6 26.6
RoCE (%) 20.2 24.3 26.3 26.3 Source: ACE Equity, Axis Securities
PER (x) 19.3 18.3 15.8 14.4 Aditya Welekar
P/BV 4.4 4.8 4.4 4.0
Sr. Research Analyst
EV/ EBITDA 18.4 15.3 12.8 11.3
Email: [email protected]
Debt / Equity (x) 0.0 0.0 0.0 0.0
Source: Company, Axis Research Shridhar Kallani
Research Associate
Email: [email protected]

1
FY23 Performance Round-up
Bajaj Auto (BAL) is the second-largest manufacturer and largest exporter of motorcycles in India. The company is also
the world’s largest manufacturer of three-wheelers. It sells motorcycles in 100cc, 125cc, and >125cc segments. It has a
collaboration with KTM and Husqvarna through which it operates a ‘Probiking’ business and sells KTM bikes across
India. The company launched the Chetak e-scooter as an ‘Urbanite’ business in FY21, and it sold 36,260 units of
Chetak in FY23 vs. 8,187 in FY22. Bajaj is also the market leader in the 3W domestic market with a 73% market share
in FY23 (68.6% in FY22).

Product-wise Performance
Motorcycles
Bajaj Auto’s overall market share dropped to 17.3% in FY23 from 18.2% in FY22, led by a drop in the market share for
both 100cc and >125cc motorcycles. In FY23, amidst the high commodity RM prices and shortage of semiconductors,
the company focused on the 125cc segment as the 100cc segment with higher competitive intensity offered lower per
unit EBITDA. Consequently, the 125cc motorcycles market share improved to 25% in FY23 from 21% YoY.

For the International Business (IB), the company’s total exports market share of total exports from India stood at 51% in
FY23 (54% in FY22), while exports contribution to its total sales volumes stood at 46.4% in FY23 (58.2% in FY22).
Unlike in the recent past, FY23 has been a difficult year for exports due to geopolitical uncertainties, inflation, and the
unavailability of US dollars for key importing nations.

Exhibit 1: Motorcycle Sales mix

Bajaj domestic Motorcycles FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
100 cc 9,21,721 8,36,268 9,51,530 14,42,982 10,79,432 7,34,712 7,68,330 6,00,963 -22%
>110cc &<= 125 cc 1,47,493 1,30,746 1,16,563 52,925 1,94,756 4,71,403 4,58,880 6,76,593 47%
> 125 cc 8,29,743 10,34,377 9,14,471 10,45,413 8,03,948 6,01,865 4,05,687 4,92,019 21%
Total 18,98,957 20,01,391 19,82,564 25,41,320 20,78,136 18,07,980 16,32,897 17,69,575 8%

Industry domestic Motorcycles FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
100 cc 66,61,359 64,87,098 74,47,390 84,24,339 63,72,170 53,86,509 49,68,059 52,35,788 5%
>110cc &<= 125 cc 17,90,896 18,92,463 21,94,033 19,45,697 23,68,653 24,22,818 22,02,375 26,86,561 22%
> 125 cc 22,48,163 27,14,928 29,48,528 32,28,399 24,72,839 22,11,904 18,13,752 23,08,153 27%
Total 1,07,00,418 1,10,94,489 1,25,89,951 1,35,98,435 1,12,13,662 1,00,21,231 89,84,186 1,02,30,502 14%

Market Share Domestic Motorcycles (%) FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
100 cc 14% 13% 13% 17% 17% 14% 15% 11% -399
>110cc &<= 125 cc 8% 7% 5% 3% 8% 19% 21% 25% 435
> 125 cc 37% 38% 31% 32% 33% 27% 22% 21% -105
Total 17.7% 18.0% 15.7% 18.7% 18.5% 18.0% 18.2% 17.3% -88

Bajaj Auto Mix Motorcycles (%) FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
100 cc 49% 42% 48% 57% 52% 41% 47% 34% -1309
>110cc &<= 125 cc 8% 7% 6% 2% 9% 26% 28% 38% 1013
> 125 cc 44% 52% 46% 41% 39% 33% 25% 28% 296

Industry Mix Motorcycles (%) FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
100 cc 62% 58% 59% 62% 57% 54% 55% 51% -412
>110cc &<= 125 cc 17% 17% 17% 14% 21% 24% 25% 26% 175
> 125 cc 21% 24% 23% 24% 22% 22% 20% 23% 237

Bajaj Exports Motorcycles FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
100 cc 8,52,555 6,43,125 7,68,407 10,18,748 11,38,965 10,19,327 12,25,075 7,94,035 -35%
>110cc &<= 125 cc 91,840 98,719 1,43,648 2,30,932 2,77,894 2,48,558 3,52,447 3,38,632 -4%
> 125 cc 5,14,900 4,76,697 4,82,702 4,45,873 4,52,361 5,28,633 6,18,250 5,04,284 -18%
Total 14,59,295 12,18,541 13,94,757 16,95,553 18,69,220 17,96,518 21,95,772 16,36,951 -25%

Industry Exports Motorcycles FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
Total 22,10,615 20,27,297 24,83,307 28,65,851 31,35,548 30,37,439 40,82,442 32,30,981 -21%

Market Share Exports Motorcycles (%) FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY23 growth YoY
Total 66% 60% 56% 59% 60% 59% 54% 51% -312

Source: company, SIAM

2
Scooters: Chetak
Supply constraints impacted the Chetak production in Q1FY23. However, production picked up post that and the
company produced 36,260 units in FY23. However, Bajaj is slower than other EV players in ramp-up of its EV-2W.

Exhibit 2: 2W EV sales

Domestic sales FY20 FY21 FY22 FY23 FY23 growth YoY

Chetak EV 212 1,395 8,187 36,260 343%

Source: company

Exhibit 3: EV 2W Retail Sales by company

EV 2W Retail sales FY22 FY23 % Change Jun'23 Jul'23

Ola Electric 14,401 1,52,542 959% 14,703 19,033
Okinawa Scooters 46,452 94,626 104% 2,167 2,138
Hero Electric 65,306 88,591 36% 970 759
Ampere Vehicles 24,652 84,551 243% 1,317 1,343
TVS Motors 9,737 81,887 741% 5,253 9,599
Ather Energy 19,980 76,833 285% 3,422 6,198
Bajaj Auto 7,112 32,556 358% 2,100 3,912
Okaya EV - 13,172
Revolt Motors 7,639 12,922 69%
Pure EV 14,868 11,555 -22%
Others 42,394 77,513 83% 6,162
Total 2,52,541 7,26,748 188% 36,094

Source: company, Axis Securities

Three-Wheelers
In the 3W space, the company has maintained its leadership position in the passenger carriers (PC) segment. Both
domestic and export industry sales peaked in FY19 and totalled 12.68 Lc units in FY19. However, the sales collapsed
to 6 Lc units in FY21 due to Covid-19. Sales have recovered since then and in FY23, the industry sold a total of 7.76 Lc
units. Bajaj has gained market share in the domestic market but lost share in the IB market.
Exhibit 4: 3W Sales mix
Domestic 3Ws FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Passenger carriers
BAL’s sales 2,53,670 2,39,985 3,46,846 3,68,208 3,34,714 81,618 1,30,172 2,61,386
Industry sales 4,41,091 4,02,034 5,17,423 5,72,392 5,25,015 1,27,790 1,66,147 3,29,784
BAL’s market share 57.51% 59.69% 67.03% 64.33% 63.75% 63.87% 78.35% 79.26%
Goods carriers
BAL’s sales 0 13,241 22,791 30,618 30,103 27,686 30,427 38,623
Industry sales 97,001 1,09,624 1,18,275 1,28,619 1,11,554 80,301 67,900 81,309
BAL’s market share 0.00% 12.08% 19.27% 23.81% 26.99% 34.48% 44.81% 47.50%
Total 3W Domestic
BAL’s sales 2,53,670 2,53,226 3,69,637 3,98,826 3,64,817 1,09,304 1,60,599 3,00,009
Industry sales 5,38,092 5,11,658 6,35,698 7,01,011 6,36,569 2,08,091 2,34,047 4,11,093
BAL’s market share 47.14% 49.49% 58.15% 56.89% 57.31% 52.53% 68.62% 72.98%
Export 3Ws FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
BAL's 3W Exports 2,80,000 1,91,236 2,66,215 3,78,777 2,96,700 2,54,200 3,10,854 1,84,284
Industry exports 4,04,441 2,71,894 3,81,002 5,67,683 5,01,651 3,92,941 4,99,730 3,65,549
BAL’s market share 69% 70% 70% 67% 59% 65% 62% 50%
Total 3Ws FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
BAL's total 3W sales 5,33,670 4,44,462 6,35,852 7,77,603 6,61,517 3,63,504 4,71,453 4,84,293
Industry total sales 9,42,533 7,83,552 10,16,700 12,68,694 11,38,220 6,01,032 7,33,777 7,76,642
BAL’s market share 57% 57% 63% 61% 58% 60% 64% 62%

Source: company, SIAM

3
Total Sales Summary
Total sales volumes were impacted by lower exports across segments in FY23. Domestic sales improved YoY in FY23,
led by a strong rebound in both 2Ws and 3Ws demand, but exports remained weak, dragging the total sales down by
9% YoY in FY23.
Exhibit 5: Total Sales mix
Total Sales Summary FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 YoY
Domestic MCs 18,98,957 20,01,391 19,82,564 25,41,320 20,78,136 18,07,980 16,32,897 17,69,575 8%
Export MCs 14,59,295 12,18,541 13,94,757 16,95,553 18,69,220 17,96,518 21,95,772 16,36,951 -25%
Total MCs 33,58,252 32,19,932 33,77,321 42,36,873 39,47,356 36,04,498 38,28,669 34,06,526 -11%
Domestic Scooters
- - - - 212 1,395 8,187 36,311 344%
(Chetak)
Export Scooters (Chetak) 5 Na
Total Scooters - - - - 212 1,395 8,187 36,316 344%
Total 2Ws 33,58,252 32,19,932 33,77,321 42,36,873 39,47,568 36,05,893 38,36,856 34,42,842 -10%
Domestic 3Ws 2,53,670 2,53,226 3,69,637 3,98,826 3,65,315 1,09,304 1,60,599 3,00,009 87%
Export 3Ws 2,80,000 1,91,249 2,66,170 3,78,777 2,96,202 2,54,200 3,06,528 1,82,004 -41%
Total 3Ws 5,33,670 4,44,475 6,35,807 7,77,603 6,61,517 3,63,504 4,67,127 4,82,013 3%
Quadricycle Domestic - - - - 942 -12 124 725 485%
Quadricycle exports - - - 4,490 5,185 3,529 4,326 2,280 -47%
Total Quadricycle - - - 4,490 6,127 3,517 4,450 3,005 -32%
Total CVs 5,33,670 4,44,475 6,35,807 7,82,093 6,67,644 3,67,021 4,71,577 4,85,018 3%
Total Domestic Sales 21,52,627 22,54,617 23,52,201 29,40,146 24,44,605 19,18,667 18,01,807 21,06,620 17%
Total Export Sales 17,39,295 14,09,790 16,60,927 20,78,820 21,70,607 20,54,247 25,06,626 18,21,240 -27%
Total Sales 38,91,922 36,64,407 40,13,128 50,18,966 46,15,212 39,72,914 43,08,433 39,27,860 -9%

Source: company

Segment-wise Performance
Bajaj Auto has significant cash & CE and investments on its balance sheet. As a result, it has three reporting segments
i) Automotive business ii) Investments and iii) Others. Non-operating (investment income) constituted 3% of total
income in FY23 (4% in FY22). Exports share of revenue declined to 41% in FY23 from 53% YoY.

Exhibit 6: Segmental Revenue split (Rs Cr) Exhibit 7: Revenue by geography

Revenue from operations FY22 FY23 Change

Revenue from contracts with customers 32,136 35,359 10%
Scrap sales 29 29 -2%
Export incentives 551 469 -15%
PSI 31 45 48%
Royalty 175 232 33%
Technical know how fees 3 0 -100% 2023,
Rent 27 40 51% 41% 2022, India
Insurance claims 0 1 143% 2022,
47%
Miscellaneous receipts 92 159 73% 53% 2023, Outside India
Government grants 3 3 0% 59%
Interest income on financial services to dealers 99 91 -8%
Other operating revenue 1,009 1,068 6%
Revenue from operations 33,145 36,428 10%

Investment income 1,157 972 -16%

Others 52 209 304%
Total income 34,354 37,609 9%

Source: company, Axis Securities

4
Subsidiary-wise Performance

Bajaj Auto has five overseas subsidiaries and two Indian subsidiaries and none of these are material subsidiaries.

Bajaj Auto International Holdings BV (BAIH BV) is a 100% Netherlands-based subsidiary of Bajaj Auto. Over the
years 2007 to 2013, through this subsidiary, Bajaj Auto has invested a total of €198.1Mn (Rs 1,219 Cr). BAIH BV holds
49.9% stake in Pierer Bajaj AG (PBAG). PBAG in turn holds 73.3% stake in Pierer Mobility AG (PMAG). Bajaj’s
effective stake in PMAG as a result comes out at 37% and hence PMAG is accounted in consolidated financials as
Investments in associate of subsidiary. PMAG is Europe’s leading ‘Powered Two-wheeler’ manufacturer with a focus
on highly innovative sports motorcycles and electric mobility-E bicycles, E motorcycles, etc. With its KTM, Husqvarna
and GASGAS motorcycle brands, it is a leading premium motorcycle manufacturer in Europe.

PT. Bajaj Auto Indonesia is a 99.25% subsidiary of Bajaj Auto. Routine business operations of PT BAI remain
discontinued in FY23.

Bajaj Auto (Thailand) Ltd. is a wholly owned 100% subsidiary of Bajaj Auto and it has an Engineering Design Centre
(EDC) which is operational and international designers are working from this facility in Bangkok

Chetak Technology Ltd. (CTL)is a 100% subsidiary that houses the company’s EV business with a clear focus on
developing new technologies and products, having dedicated manufacturing, sales, and after-sales and offering
customer-centric experiences. In FY23, additional capital of Rs 465 Cr has been infused in CTL by way of rights issue
taking the total investment value at Rs 470 Cr. For FY23, CTL sold 4,873 units, generating a total operating income of
Rs 81 Cr and recorded a net loss of Rs 77 Cr (As in the early stage of EV adaptation).

Bajaj Auto Consumer Finance Ltd. (BACFL) is a wholly owned captive financing company set up to increase
geographic and financing options for retail customers. An application for registration of BACFL as NBFC has been
made to RBI and the matter is under process. Formed on 6th Dec’21 with an initial issued and subscribed share capital
of Rs 5Cr; in FY23, additional capital of Rs 25 Cr has been infused in BACFL by way of rights issue.

Bajaj Auto Spain S.L.U. is a wholly owned subsidiary in Barcelona, Spain with an issued and subscribed share capital
of Rs 5 Cr to set up EDC. The EDC has just started operations with the facility being set up and is expected to be fully
operational in FY24.

Bajaj Do Brasil Comercio De Motocicletas Ltda is a wholly owned subsidiary set up recently on 31st Mar’22 with a
paid-up equity share capital of Rs 48 Cr to cater to the important Latin American market. The subsidiary has just
started operations after obtaining all necessary approvals. Full-scale operations are likely to commence in FY24.
Exhibit 8: Subsidiary-wise Performance

Country of % Stake
Particulars (Rs Cr) FY22 FY23 Change Comments/Analysis
incorporation of Bajaj
Investment in subsidiaries
PT. Bajaj Auto Indonesia Indonesia 99.25% 4.00 4.00 0.00%
Bajaj Auto International Holdings BV Netherlands 100.00% 1,218.72 1,218.72 0.00%
Bajaj Auto (Thailand) Ltd. Thailand 100.00% 10.54 10.54 0.00%
Additional capital of Rs 465 Cr has been
Chetak Technology Ltd. India 100.00% 5.00 470.00 9300.00%
infused in CTL by way of rights issue
Additional capital of Rs 25Cr has been
Bajaj Auto Consumer Finance Ltd. India 100.00% 5.00 30.00 500.00% infused in BACFL by way of a rights
issue.
Bajaj Auto Spain S.L.U. Spain 100.00% 5.17 5.17 0.00%
Set up a wholly owned subsidiary on 31st
Bajaj Do BrasilComercio
Brazil 100.00% - 48.00 nm Mar’22 with a paid-up equity share
De MotocicletasLtda
capital of Rs 48 Cr.
PAT

PT. Bajaj Auto Indonesia Indonesia 99.25% (0.03) - nm

Bajaj Auto International Holdings BV Netherlands 100.00% 1,152.71 529.82 -54.0%

Bajaj Auto (Thailand) Ltd. Thailand 100.00% 0.54 0.68 25.9%

Chetak Technology Ltd. India 100.00% (4.03) (76.61) nm

Bajaj Auto Consumer Finance Ltd. India 100.00% (1.50) (7.99) nm

Bajaj Auto Spain S.L.U. Spain 100.00% (0.24) 0.47 nm

Bajaj Do BrasilComercio
Brazil 100.00% - (6.16) nm
De MotocicletasLtda

Source: Company; Axis Securities

5
Key Operating Activities
New Launches: The management expects to launch at least one model under the Triumph brand annually. As per
media reports, the company is likely to launch multiple Pulsar models in FY24 and FY25.

Recent launches: The company sold a few hundred units of E-3W in Q1FY24. E-3W Passenger vehicle was launched
in Agra while the commercial vehicle was launched in Pune; thereby targeting the towns which have some restrictions
for plying ICE 3Ws. The company wants to scale up EV-3Ws step by step, as it is very important to give a stable
product to commercial users. Post global launch on 27th Jun’23 in London, Bajaj launched the Triumph Speed 400 and
Triumph Scrambler 400X in association with Triumph in India in July’23. The Speed 400 is priced at Rs 2.33 Lc. The
price of the Scrambler 400 was not announced.

Capacity Updates & Capex FY23: Bajaj Auto’s current installed capacity is 67.5 Lc units per annum. The new Chakan
II facility has 25k units per month capacity, where both KTM and the recently launched Triumph will be manufactured.
Triumph would have an initial capacity of 5k units/month and the overall capacity at the Chakan plant can be expanded
beyond 40k units per month to fulfil demand in future from these premium bikes. A new facility in Waluj for 3W EVs is
being set up.
Exhibit 9: Plant Capacity
Plant Capacity
Units/annum Product Range
Mar'23
Waluj Motorcycles 27,00,000 Boxer, CT, Platina, Discover, Pulsar
Commercial Vehicles 9,30,000 Passenger Carriers, Goods Carriers, Quadricycle
Chakan Motorcycles 12,00,000 Pulsar, Avenger, Dominar, KTM, Husqvarna
Chakan/Akurdi Scooters 1,20,000 Chetak
Pantnagar Motorcycles 18,00,000 CT, Platina and Pulsar
67,50,000
Chakan II 3,00,000

Source: Company; Axis Securities

Total Capex of ~Rs 1,000 Cr in FY23: In FY23, Bajaj spent a total Capex of ~Rs 1,000 Cr (including Chetak
Technology), the highest amongst the Capex spent so far, primarily to set up capacities of its electric vehicle (EV)
facilities for two and three-wheelers and ramping up its premium motorcycle volumes.

Building capabilities for E-3Ws: For FY24, Bajaj Auto plans to invest Rs 1,000 Cr which includes Rs 500 Cr for the
EV segment, the majority of which will go towards building capabilities for E-3Ws and debottlenecking operations to
enhance electric vehicle component capacity amid an expected surge in its EV volumes. The company is working on
expanding the supply chains of its electric vehicle components relative to its scale.

Important Strategic Implementations: Bajaj Auto follows TPM (Total Productive Maintenance) towards all its
operations including vendors, dealers, and distributors to achieve productivity, lower cost and quality.

Supply Chain & Logistics: Bajaj has a TPM concept at the Tier I vendors, who in turn have extended the TPM
practices down the supply chain to their vendors. The company has also taken up a drive to maximise supplies to all its
plants from vendors within the plant cluster. The majority of its supplies at the respective company’s manufacturing
locations are being done by vendors; located in each cluster. This has significantly shortened the length of the
company’s supply chain and reduced its carbon footprint.

Sales & Distribution: The TPM methodologies are also extended to the company’s Indian and overseas distributors.
As of 31st Mar’23, it had 1,012 dealerships practising TPM. Bajaj Auto has exclusive dealership networks for KTM,
Bajaj Motorcycles, Chetak Electric, and 3-wheelers to differentiate customer experience and preserve brand value.

6
Research & Development Activities
FY23 was a challenging year for R&D due to tight timelines for meeting the OBD phase II norms for the automotive
products and EV development focus.

i) Products:

a. Developed/upgraded Bajaj Pulsar models – N250 and F250 with a Twin Channel Anti-Lock Braking
System (ABS) and steel braided rear brake hoses for enhancing rider confidence and safety during
braking. N160 with additional safety of the Dual Channel ABS, NS200 and NS160 upgraded with
upside-down fork suspension, twin channel ABS, and an updated instrument console with a gear
position indicator and fuel economy display and P150 Single Disc and P150 Twin Disc models which
use a new 150cc air-cooled power train, for robust performance and gear shift.

b. Low-Speed EV: Bajaj has developed a low-speed e-2W for Yulu, where the company has a 19% stake
– to address its need for shared mobility business. Yulu is a new-age Mobility-as-a-Service company.
The Yulu-Bajaj partnership focuses on providing sustainable last-mile mobility and deliveries in urban
areas. They have jointly created Yulu’s 3rd generation e-scooter – Miracle GR a personal-use vehicle,
and Dex GR a last-mile delivery vehicle.

ii) Processes: The focus is on improving its operations in key areas such as

a. Manpower: To meet the rapidly expanding aspirations of the company, R&D has expanded its team
size in areas of design, analysis, and validation.

b. Facilities: Continued investment in design, computing, prototype manufacturing and validation facilities.

c. Regulatory requirements: To meet the new BS6 OBD2 norms, R&D calibrated and homologated the
entire range of two and three-wheelers in time. The company managed to implement the AIS 156 for
functional safety requirements for EVs and traction batteries within four months by Mar’23. Ministry of
Heavy Industry (MHI) in Nov’22 mandated various cell/battery pack/ BMS level tests as pre-conditions
for claiming FAME II/PLI scheme incentives. The company complied with these by Mar’23. It also
managed to adjust its powertrain and vehicle configurations to meet the new OBD norms announced in
Nov’22 by Mar’23.

iii) Technology: Bajaj Auto’s engineering has developed capabilities for digitisation and Industry 4.0 through its
various verticals including automation and robotics.

iv) Outgo: R&D expenditure as % of total sales stood near 1.5% in FY23.
Exhibit 10: R&D Expenditure
R&D (Rs Cr) FY22 FY23 Change
Capital (including technical know-how) 42.06 35.15 -16%
Recurring 446.73 489.91 10%
Total 488.79 525.06 7%
Total R&D expenditure as a % of sales 1.52% 1.48%

Source: Company; Axis Securities

Key Competitive Strengths

 Growing strength in the Domestic 125cc Motorcycles segment
 Established player in the overseas 2W market
 Leadership in the 3W passenger carrier segment
 Sound financial risk profile

7
Key Growth Drivers
Focus on premium motorcycles: Domestic bookings for recently launched Triumph models have crossed 17k units.
The company is ramping up production to reach 5k by Sep’23 and exports are expected to start from Oct’23. The
management expects to launch at least one model under the Triumph brand annually.

2W Motorcycle demand: The company expects the domestic MC industry to grow at 4-6% (earlier 6-8% guidance in
Q4FY23) over the next few quarters.

Exports recovery likely in H2FY24: As per the management, export demand seems to have bottomed out and
inventory levels remain low (trailing behind retail). The motorcycle recovery in Q1FY24 over Q4FY23 has largely been
driven by demand from Africa. LATAM has held steady volumes and improvements can be witnessed in South Asia
and the Middle East while Bangladesh is a laggard. Hence underlying recovery is a mixed bag and the management is
cautiously optimistic about Q2FY24. Dollar availability is expected to improve post-Q2FY24.

EV Ramp up ahead: Post FAME II subsidy reduction, the industry is expected to grow in low double-digits YoY vs.
triple-digit growth achieved in prior years. As of Q1FY24, Chetak is present in 100 cities and will expand to 120 towns
(140 stores) by Q2FY24. The company informed that it has launched a 3W passenger EV in Agra and a 3W
commercial EV in Pune, targeting towns that have some restrictions for plying ICE 3Ws. A new facility in Waluj for E-
3Ws is being set up. The Capex in FY24 for EV is expected to be Rs 400-500 Cr.

Key Strategies Moving Forward

The management’s strategic focus is on the growing 125cc+ segment. In FY16, the 100-110cc commuter
segment formed 62% of the industry mix and 125cc+ formed the remaining 38%, while the ratio was almost 50:50 in
FY23. Bajaj’s 125cc+ segment formed 70% of the overall volumes in Q1FY24 (66% in FY23).

Inventory management: On exports, the management maintained a discipline shipments approach thereby keeping
the inventory buld-up in check. The management in Q1FY24 conference call informed that retails have outpaced
wholesale dispatches and there is substantial headroom for growth to build back the inventory. Nevertheless, due to
the macroeconomic situation and geopolitical challenges, gradual recovery is expected post Q2FY24.

Network expansion/ product launches: Triumph, KTM and Husqvarna to aid in product premiumisation and higher
ASP. Furthermore, EV launches in the next 12 months across segments along with network expansion to aid in faster
growth than the industry

Business Outlook & Recommendation

The company’s product positioning towards the growing 125cc+ segment and expected export recovery is to drive
growth moving ahead. Moreover, venturing into the premium MC segment, expanding EV portfolio, and easing supply
chains add operational levers to maintain margins and reaffirm our BUY rating on the stock.

8
Risks & Mitigation
 Failure of pick up in export demand. Inventory management: to keep the wholesale dispatches in line with
the retail demand.

 Commodity prices rising from the current level, which would impact the company’s gross margins
negatively.

 Chip shortage impacts the supply of premium bikes (KTM and Triumph). Management is rationalising
supply chains.

 Lower EV demand scenario post reduction in FAME II subsidy which may hamper the off-take of EV
vehicles in the domestic market. The focus is on building EV products considering on FAME subsidy cuts.

Progress on Sustainability
The company has completed a materiality assessment in FY23 identifying ESG issues evaluating the potential impacts
and risks associated with these issues and determining their significance in terms of financial performance, reputation,
and long-term sustainability. The materiality matrix is shown in the table below. The company has set specific goals for
relevant metrics. It has achieved its commitments, goals and targets set for the year.
Exhibit 11: ESG materiality matrix
Environment (E) Description Goal
With various stakeholders focusing on the company’s net To reduce Scope 1 and Scope 2 emissions by 5% year on
Emissions
GHG emissions in Scope 1, 2 and 3 categories year (Starting from FY24).

Establish a business excellence team to identify Maximize Renewable Energy use by 10% year on year
Energy management opportunities for energy efficiencies. Regular internal through increase
energy audits and energy cost reduction studies in Solar Energy generation.

To ensure the integration of ESG throughout its supply

Encourage its industrial suppliers to obtain ISO 14001/ISO
chain, it is undertaking an assessment of ESG criteria for
Responsible supply chain 45001 certification, to demonstrate their
100% of its Non-Industry suppliers by 2024. Currently,
and service providers commitment to conducting business in an ethical and
78% of its Non-Industry suppliers are assessed under
sustainable manner
ESG criteria.

Working in compliance with India’s Plastic Waste

Minimize consumption of packaging plastic by 50% by
Management Rules, 2016. Waste reduction is taken on by
2030 (Starting from FY24). To sustain 100% Water
Waste generation and implementing the 6R principle across its plants. (6R -
Positivity by rainwater harvesting and groundwater
Water management Reduce, Reuse, Recycle, Recover, Redesign, Regulate).
recharge. To sustain Zero Liquid Discharge by recycling
Waste is segregated on the shop floor into Hazardous and
water.
Non-Hazardous category

Social (S)
Community/employee
engagement
and development
Consumer satisfaction is measured through its NPS (net
TPM methodology at our dealership to ensure quality
promoter score) process. Its marketing team conducts
Customer satisfaction services at our dealer network. The company takes
Focused Group Discussions to understand
customer feedback in various ways
customer feedback

The Company has implemented proactive measures like

HIRA, safety observation tours, Job Safety Analysis (JSA),
Zero fatalities recorded in FY23.
Occupational health and safety STOP cards, online work permission systems,
Lost Time Injury Frequency Rate (LTIFR) is NIL in FY23
Hazard and Operability study (HAZOP), Risk and
Consequences Analysis, and Safety Audits

Business ethics, Corporate governance, Innovation &

Governance (G)
Product quality, Regulatory compliance

Source: Company; Axis Securities

9
Financial Statement Analysis
Key P&L Takeaways
Exhibit 12: P&L summary
Particulars FY22 FY23 Change Comments
Revenue Revenue grew to a record level, led by higher realized prices (up 20% YoY), despite lower total
from 33,145 36,428 10% sales volume YoY. ASP increased on account of price hikes, recovery in domestic sales, and
operations higher 3W sales, partially offset by lower exports
Raw
24,330 26,055 7%
Materials
Gross
8,815 10,373 18% GMs increased to 28.4% vs. 26.6% in the last year due to topline growth
Profits
Operating Other expenses increased on account of higher employee and advertisement expenses, but
3,556 3,824 8%
Expenses expenses as % of sales declined by 23bps YoY
EBITDA 5,259 6,549 25% Recorded EBITDA growth led by higher topline and improved gross margins
D&A
269 282 5%
Expenses
EBIT 4,989 6,267 26%
Other
1,209 1,181 -2% Slight drop in other income on account of a slight decline in other liquid investments
Income
Interest 9 39 356%
PAT 5,019 5,628 12% Higher EBITDA drives PAT growth
EPS 17.4 19.7 14% EPS growth led by higher PAT. Outstanding shares decline on buyback

Source: Company; Axis Securities, Note: Standalone financials in Rs Cr

Exhibit 13: Revenue (Rs Cr) grew in FY23 led by higher ASP Exhibit 14: Higher ASPs offset lower volumes in FY23

40,000 25% 30%

20% 20%
30,000 15% 10%
10%
20,000 0%
5%
-10%
10,000 0%
-5% -20%
FY17 FY18 FY19 FY20 FY21 FY22 FY23
0 -10%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Volume (units) growth YoY% Revenue growth YoY %
Revenue Revenue growth YoY % ASP (Rs/unit) YoY %

Source: Company

Exhibit 15: EBITDA growth led by higher topline and GMs Exhibit 16: Higher EBITDA drives PAT growth

8,000 30% 60,000 20%

50,000 15%
6,000 20% 10%
40,000
5%
4,000 10% 30,000
0%
20,000 -5%
2,000 0%
10,000 -10%
0 -10% 0 -15%
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

EBITDA EBITDA growth YoY% PAT PAT growth YoY %

Source: Company

10
Margins Commentary
Exhibit 17: Margins Summary

Particulars FY22 FY23 Change Comments

GMs % 27% 28% 188 GMs increased to 28.4% from 26.6% in the last year led by topline growth

EBITDA margins expanded by 211bps YoY, led by topline growth on higher

EBITDA margin % 16% 18% 211
ASP and cost control measures
PAT margins grew led by higher EBITDA, partially offset by lower other income
PAT margin % 15% 15% 31
and higher interest expense

Source: Company; Axis Securities

Exhibit 18: Margins improved in FY23 led by higher top line and lower RM costs

33 33
23 35
31
21 30 29
21 20 28 28
27 30
18 19 18
19 17 17
17 18 25
16 16
17 15
17 15 15
15 16 20
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

EBITDA % PAT % GM %, Rhs

Source: Company.

Financial Ratios
Exhibit 19: Motorcycle Sales mix

Particulars FY22 FY23 Change Comments

ROE 18% 20% 210 bps ROE improved led by higher PAT

ROCE 25% 28% 350 bps ROCE improved on account of a significant jump in EBIT

Asset turnover improved, led by sales growth driven by

Asset Turn 1.02x 1.09x 0.08x
ASP growth, partially offset by lower investments
Fixed Asset turnover declined on higher Capex of over
Fixed Assets Turnover Ratio 17.28x 12.87x -4.41x
Rs 1,000 Cr (including Chetak Technologies Ltd), partially offset by higher revenue
The company has no outstanding term borrowings, except sales tax
Debt/Equity 0.00x 0.00x 0.00x deferral liability amounting to Rs 124 Cr which is interest-free and is
repayable after 10 years from the balance sheet date.
Source: Company; Axis Securities

11
 Key Balance Sheet Takeaways

Share Capital: The Board of Directors of the company on 27thJun’22 approved a proposal to buyback fully paid-up
equity shares of the company (FV of Rs10) from the existing shareholders (except promoters, promoter group and
persons in control of the company) from open market at a maximum buyback price not exceeding Rs 4,600/share and
maximum buyback size up to Rs 2,500 Cr. Open market buyback of 0.64 Cr shares (FV of Rs 10/share) resulted in a
decrease in share capital by Rs 6.41 Cr. The buyback was completed at a weighted average price of Rs 3,900/share,
resulting in a cash outflow of Rs 2,499 Cr and Rs 582 Cr was paid towards tax on the buyback.

Reserves: Reserves declined mainly led to the final dividend paid (Rs 4,051 Cr) and share buyback and tax thereon
of Rs 3,087 Cr.

Cash & liquidity position: The company has a strong liquidity position with C&CE at Rs 219 Cr as of FY23 and
liquid investments at Rs 21,137 Cr. It has no outstanding term borrowings except sales tax deferral liability amounting
to Rs 124 Cr. They are interest-free and are repayable after 10 years from the balance sheet date.

Investments in subsidiaries: In FY23, the company infused capital in Chetak Technology Ltd (CTL) (Rs 465 Cr),
Bajaj Auto Consumer Finance Ltd. (BACFL) (Rs 25 Cr) and set up a wholly owned subsidiary in Brazil on 31st Mar’22
with a paid up equity share capital of Rs 48 Cr.

Exhibit 20: Balance sheet summary

Particulars (Rs Cr) FY22 FY23 Change Comments

Open market buyback of 0.64 Cr shares (FV of Rs 10/share), resulting in a decrease
Share capital 289.37 282.96 -6.41
in share capital by Rs 6.41 Cr.
Reserves decline was mainly led by the Final dividend paid (Rs 4,051 Cr) and share
Reserves 26,379 25,143 -1,237
buyback and tax thereon Rs 3,087 Cr
Gross block increase, led by total PPE of Rs 943 Cr, Capex on technical know-how of
Gross Block 4,466 5,304 838
Rs 36 Cr, offset by sale of PPE of Rs 137 Cr

Current Assets 9,994 8,870 -1,124

Current Liabilities 4,689 5,198 509 Increase in trade payables

Cash & Equivalent 564 219 -345 C&CE is down mainly due to Share buyback and dividends paid
Additional capital of Rs 465 Cr has been infused in CTL by way of a rights issue.
Investments in Additional capital of Rs 25Cr has been infused in BACFL by way of a rights issue.
1,248 1,786 538
subsidiaries Set up a wholly owned subsidiary in Brazil on 31st Mar’22 with a paid-up equity share
capital of Rs 48 Cr.
Other investments 22,570 21,137 -1,433

Total Assets 31,922 31,128 -794

Source: Company; Axis Securities

Exhibit 21: Higher Capex (~Rs 1,000 Cr in FY23) drivers increase in Gross Block

6,000 5,435
4,475 4,494 4,253 4,291 4,562
4,078
4,000
2,666
1,975 1,867 1,745 1,659 1,613 1,783
2,000

0
FY17 FY18 FY19 FY20 FY21 FY22 FY23

Gross Block Net Block

Source: Company. Note: Standalone financials (Rs Cr)

12
Exhibit 22: Investments and Cash & Cash Equivalent (Rs Cr) declines YoY led by share buyback

25,000 527 588 286

20,000 778 923 308
294
15,000
10,000 21,450 22,621 21,187
16,423 17,992 17,017
5,000 13,567

0
FY17 FY18 FY19 FY20 FY21 FY22 FY23

Liquid investments Cash & CE

Source: Company. Note: Standalone financials (Rs Cr)

Exhibit 23: Investments in Subsidiaries – Additional capital infusion in CTL, BACFL and subsidiary in Brazil

2,000
1,500
1,000 1,786
500 1,223 1,223 1,223 1,233 1,233 1,248

0
FY17 FY18 FY19 FY20 FY21 FY22 FY23

Investments in subsidiaries

Source: Company. Note: Standalone financials (Rs Cr)

Working Capital Management

Working capital days remained stable in FY23 as the cash conversion cycle stood attractive at -9 days against -10
days in FY22. The company managed to keep its inventory days and receivables under control while keeping the
payable days higher. On an absolute basis, the net working capital fund declined to Rs 3,672 Cr from Rs 5,305 as the
Cash & CE and liquid investments in current assets declined due to dividend payments and the buyback. The
company believes that its working capital is sufficient to meet the financial liabilities within the maturity period.

Exhibit 24: Working capital management

Particulars (Rs Cr) FY22 FY23 Change Comments

Inventories 1,231 1,398 -167

Receivables 1,516 1,776 -260

Payables 3,633 4,074 441

Operating Working
-886 -900
capital
Net Working capital
5,305 3,672
funds (CA minus CL)
A slight increase in RM and Finished goods inventory is offset by a higher
Inventory Days 14 14
topline leading to stable inventory days
Trade Receivables
17 18 Stable receivable days
Days

Trade Payables Days 41 42 Stable Payable days

Cash Conversion Cycle -10 -9 Overall CCC stable with tight working capital management

Source: Company; Axis Securities

13
Exhibit 25: Cash Conversion Cycle – disciplined working capital management

80

60

40

20

0
FY17 FY18 FY19 FY20 FY21 FY22 FY23
-20

Inventory Days Trade Receivables Days Trade Payables Days Cash Conversion Cycle

Source: Company.

Forex Analysis

The company uses a combination of foreign currency option contracts and foreign exchange forward contracts to
hedge its exposure to foreign currency risk, primarily with respect to the USD.

Exhibit 26: Forex summary

Exposure to foreign currency risk (Rs Cr) 2022 2023

Receivables 9.47 7.03
Payables 0.81 0.70
Others (EEFC balances) 6.45 0.40

Foreign currency derivatives designated as hedging instruments –

2022 2023
options contracts (Rs Cr)
Notional In USD (Sell) 1,326.00 -
MTM Gain/
80.53 -
(Loss)
Source: Company; Axis Securities

Contingent Liability Analysis

Exhibit 27: Contingent Liability Analysis

Particulars (Rs Cr) FY22 FY23 Change Comments/Analysis

Claims against the Company

201 205 4
not acknowledged as debts
Excise, Service tax and
Customs matters under 341 342 1
dispute
Income tax matters 899 942 43

Value Added Tax (VAT)/Sales

142 127 -15
Tax matters under dispute
Pending before various judicial/appellate authorities in
respect of similar matters adjudicated by the
Claims made by temporary Liability Liability Supreme Court. The matter is contingent on the facts and
workmen unascertained unascertained evidence presented before the courts/
adjudicating authorities and not necessarily likely to be
influenced by the Supreme Court's order

Total 1,583 1,615 32

Source: Company; Axis Securities

14
 Related Party Transactions

There were only two material transactions. The transaction is material if the value crosses the applicable materiality
thresholds of Rs 1,000 Cr, or 10% of the annual consolidated turnover as per the last audited financial statements of
the listed entity, whichever is lower. In FY23, prior approval of shareholders was obtained for the material
transactions with KTM Sportmotorcycle GmbH (Associate of Bajaj Auto Limited’s 100% subsidiary, Bajaj Auto
International Holdings BV, based in the Netherlands). The details of the material transactions are as below:

Exhibit 28: Material Related Party Transactions

Particulars FY22 FY23 Change Comments/Analysis

KTM Sport Motorcycle GmbH 845 1,265 420 Sale of vehicles and material
Bajaj Holdings & Investment Ltd. (Investing
1,354 1,354 0 Dividend paid to holding company
party - holds 34.18% shares of Bajaj Auto Ltd.)
Source: Company; Axis Securities

Key Cash Flow Takeaways

From FY17-FY23, the company generated a total OCF of Rs 26,458 Cr and 10% of the total OCF (Rs 2,615 Cr) was
utilized towards the company’s Capex program to sustain operations and meet medium to long-term plans. The
company is able to generate consistent positive free cash flow post all the investment activities. In FY23, the
company infused capital in its subsidiaries and its investment in subsidiaries increased by Rs 538 Cr which was
largely unchanged over FY17-FY22. Capex also increased in FY23 on account of the EV focus. During the year, OCF
to EBITDA improved YoY on working capital release.

Exhibit 29: Cash Flow analysis

Particulars (Rs Cr) FY22 FY23 Change Comments/Analysis
PBT 6,505 7,409 14%
Add: Non-cash expenses 300 385 28%
Less: Investment income -1,497 -1,086 NA
OCF before WC changes 5,309 6,707 26%

(Increase)/decrease in inventories 263 -167 NA Slight increase in RM and Finished goods inventory
(Increase)/decrease in trade receivables 1,203 -267 NA
(Increase)/decrease in loans and other
77 656 749% Lower other assets
assets
Increase/(decrease) in liabilities and
-942 502 NA
provisions
Working Capital Adjustments 601 723 20%
Annuity payments (net) to VRS -0.32 -0.32 NA
Income tax -1,702 -1,918 NA
CFO 4,208 5,512 31%

Investment in subsidiary -15 -538 NA Capital infusion in CTL, BACFL and subsidiary in Brazil
Purchase of PPE -551 -943 NA
Includes Sale/(purchase) of investments, investment income and
Other investing activities 470 2,815 499%
sale proceeds from fixed assets
CFI -96 1,334 NA
FCFF 4,112 6,846 66%

Interest expense -7 -38 NA

Equity share buy-back (incl. tax thereon) 0 -3,094 NA
Dividend, including interim dividend paid -4,049 -4,047 NA
CFF -4,056 -7,179 NA
Net change in cash and cash equivalents 55 -333 NA

Source: Company; Axis Securities

15
Exhibit 30: OCF, Capex, FCF Trend (in Cr)

8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
-1,000
-2,000
FY17 FY18 FY19 FY20 FY21 FY22 FY23

OCF Capex FCF

Source: Company.

16
Financials (Standalone)
Profit & Loss (Rs Cr)
Y/E March (Rs. Cr) FY23 FY24E FY25E FY26E
Net revenues 35,756 44,113 51,857 57,447
Operating expenses 29,734 35,641 41,834 46,340
EBIDTA 6,021 8,472 10,023 11,107
EBITDA margin (%) 16.8 19.2 19.3 19.3
Other income 1,853 1,285 1,252 1,252
Interest 39 42 37 37
Depreciation 282 333 388 442
Profit Before Tax 7,409 9,382 10,849 11,880
Tax 1,781 2,262 2,604 2,851
Reported Net Profit 5,628 7,120 8,245 9,029
Net Margin (%) 15.7 16.1 15.9 15.7
Adjusted Net Profit 5,737 7,120 8,245 9,029
Source: Company, Axis Securities

Balance Sheet (Rs Cr)

Y/E March (Rs. Cr) FY23 FY24E FY25E FY26E

Equity capital 283.0 283.0 283.0 283.0

Reserves & surplus 25,143 26,603 29,189 32,559

Shareholders’ funds 25,426 26,886 29,472 32,841

Total Loans 124 124 124 124
Deferred tax liability 345 345 345 345
Total Liabilities and Equity 25,895 27,356 29,942 33,311
Gross block 5,435 6,447 7,417 8,367
Depreciation 2,769 3,102 3,490 3,932
Net block 2,666 3,345 3,927 4,435
Capital WIP 82 70 100 150
Investments 22,973 21,973 21,973 21,973
Inventory 1,398 1,725 1,636 1,812
Debtors 1,776 2,191 2,576 2,854
Cash & Bank Balance 286 938 1,725 4,411
Loans & Advances 1,947 3,224 3,357 3,581
Current Assets 5,406 8,078 9,294 12,658
Sundry Creditors 4,309 5,026 4,117 4,561
Other Current Liability 923 1,085 1,235 1,344
Current Liability& Provisions 5,232 6,111 5,352 5,905
Net current assets 174 1,968 3,942 6,753
Total Assets 25,895 27,356 29,942 33,311
Source: Company, Axis Securities

17
Cash Flow (Rs Cr)
Y/E March (Rs Cr) FY23 FY24E FY25E FY26E
EBIT 5,739 8,139 9,634 10,665
Other Income 1,853 1,285 1,252 1,252
Depreciation & Amortization 282 333 388 442
Interest paid(-) (39) (42) (37) (37)
Tax paid(-) (1,781) (2,262) (2,604) (2,851)
Extra Ord Income (144) - - -
Operating Cash Flow 5,910 7,453 8,633 9,471
Change in Working Capital 989 (1,141) (1,187) (125)
Cash flow from Operations 6,899 6,312 7,446 9,346
Capex (1,171) (1,000) (1,000) (1,000)
Strategic Investment (538) - - -
Non-Strategic Investment 1,435 1,000 - -
Cash flow from Investing (274) - (1,000) (1,000)
Change in borrowing 1 - - -
Other (2,878) 0 (0) -
Dividends paid(-) (4,051) (5,659) (5,659) (5,659)
Cash Flow from Financial Activities (6,927) (5,659) (5,659) (5,659)
Change in Cash (303) 652 787 2,686
Opening cash 588 286 938 1,725
Closing cash 286 938 1,725 4,411
Source: Company, Axis Securities

Ratio Analysis (%)

Y/E March FY23 FY24E FY25E FY26E
Revenue Growth 10.1 23.4 17.6 10.8
EBITDA Margin 16.8 19.2 19.3 19.3
Net Profit Margin 16.0 16.1 15.9 15.7
ROCE (%) 20.2 24.3 26.3 26.3
ROE (%) 20.4 24.6 26.6 26.6
EPS( Rs) 201.2 251.9 291.7 319.4
P/E (x) 19.3 18.3 15.8 14.4
P/ BV (x) 4.4 4.8 4.4 4.0
EV/ EBITDA (x) 18.4 15.3 12.8 11.3
Fixed Assets Turnover Ratio (x) 12.9 12.6 12.5 12.2
Debt / Equity (x) 0.0 0.0 0.0 0.0
EV/ Sales (x) 3.1 2.9 2.5 2.2
Source: Company, Axis Securities

18
 Bajaj Auto Price Chart and Recommendation History

(Rs)

Source: Axis Securities

Date Reco TP Research

03-Jan-22 BUY 4,500 Top Picks
20-Jan-22 BUY 4,200 Result Update
03-Feb-22 BUY 4,250 Top Picks
02-Mar-22 BUY 4,250 Top Picks
04-Apr-22 BUY 4,250 Top Picks
29-Apr-22 BUY 4,350 Result Update
01-Jun-22 BUY 4,350 Top Picks
01-Jul-22 BUY 4,200 Top Picks
28-Jul-22 HOLD 4,130 Result Update
14-Oct-22 BUY 4,000 Result Update
27-Jan-23 BUY 4,170 Result Update
26-Apr-23 BUY 4,785 Result Update
26-Jul-23 BUY 5,380 Result Update
28-Aug-23 BUY 5,400 AAA

Source: Axis Securities

19
About the analyst

1. Research Analyst: Aditya Welekar is a PGDBM in Finance with 12 years of

experience in Equity Market/Research.

2. Research Associate: Shridhar Kallani is a Chartered Accountant and a graduate from

St. Xaviers College Kolkata.

Sector: Automobiles

Disclosures:

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Axis Securities Ltd. (ASL) is a SEBI Registered Research Analyst having registration no. INH000000297. ASL, the Research Entity (RE) as defined in the Regulations,
is engaged in the business of providing Stock broking services, Depository participant services & distribution of various financial products. ASL is a subsidiary company
of Axis Bank Ltd. Axis Bank Ltd. is a listed public company and one of India’s largest private sector bank and has its various subsidiaries engaged in businesses of
Asset management, NBFC, Merchant Banking, Trusteeship, Venture Capital, Stock Broking, the details in respect of which are available on www.axisbank.com.
ASL is registered with the Securities & Exchange Board of India (SEBI) for its stock broking & Depository participant business activities and with the Association of
Mutual Funds of India (AMFI) for distribution of financial products and also registered with IRDA as a corporate agent for insurance business activity.
ASL has no material adverse disciplinary history as on the date of publication of this report.
I/We, author/s and the name/s subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect my/our views about the
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This report has been prepared by ASL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly
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 DEFINITION OF RATINGS

Ratings Expected absolute returns over 12-18 months

BUY More than 10%

HOLD Between 10% and -10%

SELL Less than -10%

NOT RATED We have forward looking estimates for the stock but we refrain from assigning valuation and recommendation

UNDER REVIEW We will revisit our recommendation, valuation and estimates on the stock following recent events

NO STANCE We do not have any forward looking estimates, valuation or recommendation for the stock

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make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient.

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it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this report (including the merits and risks
involved), and should consult its own advisors to determine the merits and risks of such an investment. Certain transactions, including those involving futures, options
and other derivatives as well as non-investment grade securities involve substantial risk and are not suitable for all investors. ASL, its directors, analysts or employees
do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report,
including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income,
etc. Past performance is not necessarily a guide to future performance. Investors are advice necessarily a guide to future performance. Investors are advised to see
Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in
projections. Forward-looking statements are not predictions and may be subject to change without notice.

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on any specific merchant banking, investment banking or brokerage service transactions. ASL may have issued other reports that are inconsistent with and reach
different conclusion from the information presented in this report. The Research reports are also available & published on AxisDirect website.

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be contrary to law, regulation or which would subject ASL to any registration or licensing requirement within such jurisdiction. The securities described herein may or
may not be eligible for sale in all jurisdictions or to certain category of investors.

The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. The Company reserves the right to make modifications and alternations to this document as may be required from time to time without
any prior notice. The views expressed are those of the analyst(s) and the Company may or may not subscribe to all the views expressed therein.
Copyright in this document vests with Axis Securities Limited.
Axis Securities Limited, SEBI Single Reg. No.- NSE, BSE & MSEI – INZ000161633, ARN No. 64610, CDSL-IN-DP-CDSL-693-2013, SEBI-Research Analyst Reg. No.
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[email protected], Tel No: 022-49212706
Digitally signed by
NEERAJ NEERAJ CHADAWAR
CHADAWAR Date: 2023.08.28
08:42:06 +05'30'

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