Bajaj Auto Ltd (BJAUT IN)

Axis Securities 22nd

April 2020

HOLD

Target Price: 2,571

Automotive | Initiating Coverage

CMP (Rs) as of (Apr 22, 2020) 2,380

Upside (%) 8%

High/Low (Rs) 3,315/1,789

Market cap (Cr) Rs 68,894

Avg. daily vol. (6m)Shrs. 561,804

No. of shares (Cr) 28.94

Axis Securities - Equity Research

IN HERE FOR THE LONG HAUL

We are initiating coverage on Bajaj Auto with a HOLD rating as

significant headwinds of COVID19 and low crude oil prices will lead

to near term pressure on BJAUT but we expectit to outpace industry

growth in the long run led by 1) Innovation in product with a dual

focus on entry and premium segment 2) Focusing on exports and

expandingto newer geographies. We expect Vol/Rev/EBITDA/PAT

CAGR of -0.5%/2%/-2%/-3% over FY20E-22E. Our HOLD rating is

based on the fact that current price provides limited upside of 8%

with a target price of Rs. 2571/share, valuing it at 16X FY22E PE

ratioand Rs 80/share for its stake in KTM.

OUR INVESTMENT THESIS IS BASED ON THE FOLLOWING PREMISES

Sharp recovery expected post near term pain in Industry volumes

2WIndustry has suffered the worst decline in decades in FY20due to economic

slowdown. We expect FY21E volumes to decline further(-15% YoY) due to

pandemic led lockdown and BSVI related price hikes affecting supply and

demand, after which we expect a sharp recovery in FY22E (+16% YoY).

Previous macro led declines in 2W segment in 1992, 2008 have seen sharp

industry rebounds of 20%+.

New launches and innovation to increase domestic market share

Bajaj Auto has gained market share in the past 2 years with a series of new

launches focused on two customer segments. 1) entry segment driven by first

time buyers and 2) premium segment driven by the overall premiumization

trend in the industry. BajajAuto has gained strong market share up from ~12.8%

in FY18 to ~17.2%in FY20E. Bajaj Auto‟s aggressive product launches,

innovations (like Electronic Fuel Injection) and lower price hike on BSVI vehicles

will further propel market share in these two segments

Navigating Export challenges will be a key monitorable

Bajaj Auto has outperformed industry in recent years with the help of exports

(FY20 volumes up 4% YoY). Exports could face medium term challenges due to

low crude oil prices as BJAUT‟s major exporting hubs are in oil driven African

nations. Bajaj Auto can offset the decline in Africa through(1) penetrating into

newer geographies (2) market share gains in ASEAN region.

ROBUST FINANCIALS TO NAVIGATE NEAR TERM CHALLENGES

BJAUT has a strong, debt free balance sheet;their cash to total fixed cost ratio

is nearly4 times and FCF yield is ~11% in FY20E. This augurs well for it to

navigate near term demand slowdown. BJAUT is currently trading at 14.7X

FY22E PE multiple which is below its long term average PE of 16.5X. We

recommend HOLD with a Target Price of Rs 2571 valuing it at 16XFY22E PE

ratioand Rs 80/share for its stake in KTM. Near term weakness in the stock

from current levels will be a good opportunity to accumulate.

KEY FINANCIALS (STANDALONE)

(Rs. Cr) FY19 FY20E FY21E FY22E Net Sales 30,250 29,397 24,086 29,638 EBITDA 4,990 4,963 3,703 4,743 EPS (Rs.) 152.2 166.0 131.8 155.7 RoE (%) 19.7 19.9 15.5 18.0 RoCE (%) 19.2 19.3 15.1 17.6 PER (x) 15.1 13.9 17.5 14.8 P/BV 3.1 2.9 2.9 2.8 EV/ EBITDA 13.2 13.2 17.9 14.0

Source: Company, Axis Research

Shareholding (%)

Dec-19 Sep-19 Jun-19

Promoter 53.52 53.52 53.52

FIIs 13.88 14.05 14.61

DII 11.1 9.79 8.57

Retail 21.5 22.64 23.3

Financial & Valuations

Y/E Mar 2020E 2021E 2022E

Net Sales 29,397 24,086 29,638

EBITDA 4,963 3,703 4,743

EPS (Rs.) 166.0 131.8 155.7

RoE (%) 19.9 15.5 18.0

RoCE (%) 19.3 15.1 17.6

PER (x) 13.9 17.5 14.8

P/BV 2.9 2.9 2.8

EV/ EBITDA 13.2 17.9 14.0

Key Drivers (%)

Y/E Mar 2019 2020E 2021E

Vol Growth (%) -8 -23 21

EBITDA Mar (%) 16.9 15.4 16.0

EPS Growth (%) 9 -21 18

Axis vs Consensus

EPS Estimates FY20E FY21E FY22E

Axis 166.0 131.8 155.7

Consensus 171.4 177.5 197.0

Mean Consensus TP: Rs 3,087

Relative performance

Source: Cline, Axis Securities

Ankit Suchanti

Research Analyst

: (022) 4267 1778

: ankit.suchanti@axissecurities.in

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Bajaj Auto Ltd

Focus Charts

Fig 1: Biggest 2W industry decline in 4 decades; pain to continue in FY21E before sharp recovery in FY22E

Fig 2: Bajaj has outperformed industry and gained market share in past 2 years

Source: SIAM, Company, Axis Securities

Fig 3: Volumes to remain under pressure owing to pandemic and crude oil challenges…

Fig 4: …leading to EBITDA margin decline in FY21E before gradual recovery

Source: SIAM, Company, Axis Securities

Fig 5: Benign commodity prices to offset margin decline partially

Fig 6: Ample cash and strong FCF yield to navigate near term challenges; much better than 2008 levels

Source: Reuters, Company, Axis Securities

Fig 7: ROCE to improve post dip in FY21E Fig 8: Trading below mean historical P/E

Source: Company, Axis Securities

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Axis Securities 3

Bajaj Auto Ltd

SHARP RECOVERY EXPECTED POST NEAR TERM PAIN IN INDUSTRY VOLUMES

2W industry demand was already under pressure due to BSVI led cost push before impact of

COVID-19 outbreak and subsequent lockdown deteriorated domestic 2W industry volumes further

in FY20 to register the worst decline (~18% YoY decline) in last4 decades. Further, we expect

volumes to get impacted i n FY21 also as COVID 19 will likely disrupt 3-6 months of sales before a

pickup resumes. To understand the industry impact we looked at China‟s volume recovery in

automobile segment post lifting of lockdown and built a scenario to quantify the impact on India.

Fig 9: China PV Volume Trend (YoY % change)

PV auto volumes in China declined ~82%

YoY driven by lockdown in Hubei province.

Post containment of the outbreak and

partial relaxation, March‟20 has seen a

sharp pickup in month-on-month

volumes

India could also have a similar spike albeit

with the help of government stimulus

Source: CAAM, Axis Securities

We built in a similar scenario for the 2W industry in India with expectation of the following scenario

playing out. April and May‟20 volumes to be impacted completely with ~90% YoY decline due to

lockdown and fear of COVID-19 and then a pick up starting from June and gradual recovery

thereafteron easing of COVID-19 cases and a second wave of the virus not commencing. Possible

aid by government such as relief on taxes, festival season and other consumption led fiscal support

will further propel sequential growth. Our volume expectations are as below (in Fig 10):

Fig 10: Industry Volume estimates assuming April and May to be near washout

Source: SIAM, Axis Securities

Further, we do not have a historical benchmark for FY22 volumes as the current decline is

unprecedented and the worst phase for 2 Win last 4 decades. But looking at declines in 1992 and

2008, we see that volume growth had seen very sharp recovery with 19%/24% volume growth in

FY94/FY95 and 26/26/14% in FY10/11/12. We therefore expect a sharp 16% recovery in volumes

in FY22 over a weak base of FY21E with upside risks as shown below.

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Axis Securities 4

Bajaj Auto Ltd

Fig 11: FY22E to see sharp rebound similar to crisis of 1992 and 2008

Source: SIAM, Axis Securities

TWO PRONGED PRODUCT FOCUS TO GAIN DOMESTIC MARKET SHARE

Bajaj Auto has a clear strategy to focus on two types of customer segments in domestic

market.

1) Entry or Economy segment for first time buyers, who buy the motorcycle on factors of

cost, fuel efficiency and durability. Bajaj auto has two strong Brands “Platina” and “CT”

in this segment and has gained market share up from 12.8% in FY18 to 17.2% in

FY20on back of product interventions like CT110 and CT110H. This segment will be

driven by downtrading of vehicles from Executive to Economy due to 1) BSVI price

hikes 2) COVID led economic caution among consumers. We anticipate that the entry

segment in particular and 2W industry in general will also have a positive demand

tailwind as people recover from COVID-19 and start preferring personal transport

(changing mobility preferences) over shared and public mobility in the immediate

future.

2) Sports orPremium segment which will be driven by the overall premiumization trend in

the auto industry catering to the „millennial bikers‟ who prefer feature rich, high

performance motorcycles. Bajaj Auto is a strong player in this segment and is

represented by popular brands like Pulsar, Avenger and has global collaborations with

KTM and upcoming Husqvarna. This segment will also be the least affected by BSVI

led cost increases as price is not the focus point in this segment.

We believe these two segments will continue to grow in the 2-wheeler industry;this trend is also

evident from the shrinking executive segment (110 cc to 125 cc) overlast 5 years (refer Fig 12.).

(Economy segment in less than 110 CC and premium segment in above 125cc)

Fig 12: Executive segment market share is shrinking with Economy and Premium segment rising

Source: SIAM, Axis Securities

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Bajaj Auto Ltd

NEW PRODUCT LAUNCHES WITH INNOVATIVE FEATURES WILL HELP IN MARKET SHARE GAIN

At the start of FY19, BJAUT had announced its strategy to focus on recovering back lost

market share. Towards this, in FY19, it had launched multiple new products including several

variants of the popular Pulsar and Avenger models. Even in FY20, it has launched at least 4

new / upgraded variants, apart from its mandatory BS6 upgrades to regain market share. We

expect a similar strategy to continue going forward

Fig 13: Aggressive launches in FY19 and FY20 helped gain market share

Year Segment Models

2019

Economy Platina 100 ES and KS, CT 100 ES, Boxer 100 ES AND KS, Platina 110 ES

Executive KTM Duke 125 with ABS , CT 125 Africa, Platina 125 Max Euro III

Premium Pulsar 150, Pulsar 160 NS with Twin Disk, Avenger 160 Street with ABS, Pulsar 180 F

2020 Economy Platina 100cc, Platina H-Gear

Executive Pulsar125cc

Source: Company, Axis Securities

Bajaj Auto has developed an in-house electronic fuel injection technology, and incorporated in its

newly launched BS-VI Platina and CT100 and Pulsar 125cc which is expected to become more fuel

efficient than the old &traditional fuel injection systems. The price hike with the incorporation of this

technology in the entry segment was lower than its peers making it an attractive proposition for price

sensitive first time buyers.

Fig 14: Lower price hike for BSVI vehicles in 100CC model will drive growth in Entry segment further

Segment Company and Models BSIV Price BSVI Price Price Hike

Economy

Bajaj Platina ES 48,429 54,797 13.10%

HMCL HF Deluxe 100 cc 48,575 55,925 15.10%

TVS Star City Mono tone 53,568 61,436 14.70%

Source: Company, Axis Securities

We believe that similar innovations on fuel efficiency, price and durability will help BJAUT grow

its domestic market share in the two customer segments.

Fig 15: Strong market share gain in the Entry and Premiumsegment in last two years

Source: SIAM, Axis Securities

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Bajaj Auto Ltd

NAVIGATING EXPORT CHALLENGES WILL BE A KEY MONITORABLE

Bajaj Auto has outperformed industry in recent years with the help of strong growth in its

exports market in the past few years. In FY20, exports contributed to nearly ~47% to volumes

and >50% to EBITDA as these are high margin products for Bajaj Auto. Nearly 47% of the

exports of Bajaj Auto come from African nation which are primarily dependent on crude oil

exports led revenue. With Crude oil prices falling below $20 (from levels of $65), there would be

significant impact on exports volume for Bajaj Auto.

Fig 16: Exports to Africa would be impacted heavily if Crude oil prices remain subdued

Source: SIAM, Axis Securities

We factor in a sharp volume decline of 34% in Exports segment in FY21E as global economies

remain close and global demand recovers slowly. We then expect a recovery of 23% in FY22E

assuming the pandemic comes to a control and global demand starts picking up. The recent

record deal of OPEC+ to cut production by 9.7 million barrels per day leads us to believe that

oil will start inching upwards as demand returns.We believe exports decline would lead BJAUT

to underperform market in FY21 and also affect its EBITDA margins as it realigns its sales and

strategy.

Fig 17: Exports could see a more than 30% decline in FY21 before recovering

Source: Company, Axis Securities

Africa 47%

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ASEAN 11%

Latin America 14%

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Axis Securities 7

Bajaj Auto Ltd

We, however, note that challenges in exports volume, especially due to crude oil price decline

can be offset by BJAUT through (1) penetrating into newer geographies such as Malaysia and

Argentina and (2) market share gains in ASEAN region led by new product launches. As an

example to its ability to expand globally, BJAUT has expanded to 23 new countries in the last 5

years in 3W segment and can leverage that to sell 2W in some of these markets as well.

Moreover, we believe some of the exports volume will be offset by greater focus on domestic

sales in a scenario where global trade remains closed through aggressive marketing and

product innovation.

SOFT COMMODITY PRICES AND CURRENCY DEPRECIATION FAVOURABLE

Commodity Prices have come off recently to 3-5 year lows and is expected to remain subdued

in the near future. This will offset margin pressure due to negative operating leverage.

Fig 18: LME-Aluminum ($/MT) Fig: 19 LME-Copper ($/MT)

Source: Reuters, Axis Securities Fig 20: LME-Lead ($/MT) Fig 21: Steel Iron ore Fe62% AUS CIF China ($/MT)

Source: Reuters, Axis Securities

Fig 22: Recent Currency depreciation is favorable for BJAUT’s exports revenue

Source: Reuters, Axis Securities

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Axis Securities 8

Bajaj Auto Ltd

ELECTRIC VEHICLE – ONLY 2W ESTABLISHED OEM TO ENTER INTO THIS MARKET

Bajaj Auto delivered the first batch of Electric vehicles in Pune and Bangalorein the 3rd

week of

March‟20under its iconic “Chetak” Brand. Feature rich and priced competitively at Rs1 lakh for

the lower end version (Urbane) andRs 1.15 lakh for Premium version, the company sold over a

100 vehicles in February‟20. While it is too earlyto comment on its EV 2W performance, we

note that Bajaj is the only established OEM to have entered directly in manufacturing electric

vehicles.

The two main deterrents for EV vehicles is cost and charging infrastructure. So, it is expected

that 2W industry which is 1) used primarily for short commutes 2) can be charged once every

night at home and 3) could also be the easiest for setting a battery swap technology is best

poised for EV adoption.

Given the aggressive fall in lithium ion batteries and continuous innovation in lowering the initial

cost, and aggressive support by Government,it is a only a matter of time before EV starts

becoming a challenger to traditional fuel vehicles and Bajaj could be a leader in this segment.

At this juncture, it just provides an optionality to Bajaj Auto‟s stock.

Fig 23: Bajaj Chetak EV, stylishly designed and competitively priced

Source: Gaadiwale.com, Axis Securities

Axis Securities 9

Bajaj Auto Ltd

VOLUME AND MARGINS TO RECOVER SHARPLYIN FY22 POST DECLINE IN FY21

There are multiple headwinds in FY21 on the cost side with BSVI transition taking place,

COVID 19 led disruptions on both demand and supply which the industry in general is facing

and BJAUT in particular is facing an additional challenge of low oil prices hitting its export

demand from crude oil revenue dependent African countries.

We see all these challenges leading to a sharp decline of ~23% (Domestic ~14% decline while

~34% decline in exports) in BJAUT volumes in FY21E at a faster pace than industry decline of

~15%. We expect revenues to decline by ~18% in FY21E as a price hike of 5-6% will happen

due to BSVI transition.

We further expect EBITDA margins to be impacted heavily due to underperformance of exports

and Bajaj‟s increased efforts to sell in domestic market in FY21E but it will partially offset by

soft commodity prices and favourable currency movement and have factored in a ~150bps

reduction in margins in FY21E to account for the same.

Having said that, we see challenges of FY21 to not spiral to FY22 and a gradual recovery

starting in Q3FY21E onwards as 1) Taking cues from China and South Korea, we expect most

countries will be able to control the pandemic spread in 3-6 months and resume economic

activity 2) Crude oil prices will start inching up as demand comes back slowly with economies

opening up and OPEC+ agreeing to production cuts 3) Possible government support to the

industry in terms of tax relief and consumption boost 4) Low base over two years of

unprecedented fall. Therefore, we have factored in a sharp recovery in FY22E with a ~23%

increase in volumes in FY22E and a margin recovery of ~60 bps.

VALUATION

BJAUT is currently trading at 14.8FY22E PE and 2.8FY22E BV which is at a discount of 11%

and 44% to its long term average of 16.5X PE and 5X P/BV ratio respectively. Moreover it‟s

strong, debt free balance sheet provides it with required cushion to fight the slowdown and

expand at a quicker pace as business resumes. We expect a steep fall in FY21 before a sharp

recovery in FY22 and consequently expectVolume/Revenues/EBITDA/PAT CAGR of -

0.5%/2%/-2%/-3%over FY20E-22E. We initiate with a HOLD rating on reasonable valuation

and limited upside with a target price of Rs2571/share which implies 8% upside from

current levels, valuing it at 16X FY22E PE ratio and Rs 80/share for its stake in KTM.

Near term weakness in the stock price would be good opportunities to accumulate Bajaj

Auto from a long term perspective.

Fig 24: Trading below mean historical P/E Fig 25: Trading well below mean historical P/BV

Source: Company, Axis Securities

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Axis Securities 10

Bajaj Auto Ltd

KEY RISKS

1) The uncertainty over the extent both in terms of time and lives of COVID-19 looms

large, on both domestic and global economies. We have currently factored in the

spread of this contagion to be restricted in this quarter and recoveries to start from late

June. Any prolonged impact than this wouldlead to downside risks.

2) Any major change in global trade channels post COVID recovery also poses structural

risks to our estimates

3) Persistence of crude oil prices below $40 in the next 2 years will lead to downside risks

to our estimate as we have factored in a sharp recovery in FY22 with OPEC+ reaching

a deal and recovery in crude oil prices

4) Commodities are expected to remain benign over the next two years and any sharp

rise in key commodity prices may cause downside risks

5) Any sharp currency appreciation of INR/USD willcausedownside risk to our estimates

Axis Securities 11

Bajaj Auto Ltd

ABOUT COMPANY

Bajaj Auto was founded in 1945 and is headquartered in Pune. The company initially

manufactured scooters with some iconic brands like Bajaj Chetak before focussing solely on

motorcycles. It is the third largest motorcycle manufacturer in India with a ~20% market share.

It is the leader in the 3- wheeler commercial and goods carrier segment with a market share of

~90%. Bajaj Auto, is ranked as the world's fourth largest three and two wheeler manufacturer

and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle

East, South and South East Asia.Bajaj Auto exports to 70+ countries and a significant share of

revenues come from Exports.

Fig 26: Manufacturing details - Bajaj Auto

Source: Axis Securities

Axis Securities 12

Bajaj Auto Ltd

FINANCIALS (STANDALONE)

Profit & Loss (Rs Cr)

Y/E Mar FY19 FY20E FY21E FY22E

Net revenues 30,250 29,397 24,086 29,638

Operating expenses 25,260 24,434 20,382 24,895

EBIDTA 4,990 4,963 3,703 4,743

EBIDTA margin (%) 16.5 16.9 15.4 16.0

Other income 1,594 1,494 1,673 1,606

Interest 4.5 3.3 3.8 3.8

Depreciation 266 246 291 339

Profit Before Tax 6,703 6,207 5,082 6,006

Tax 2,028 1,406 1,270 1,501

Reported Net Profit 4,675 4,801 3,811 4,504

Net Margin (%) 15.5 16.3 15.8 15.2

Adjusted Net Profit 4,404 4,801 3,811 4,504

Net revenues 30,250 29,397 24,086 29,638

Operating expenses 25,260 24,434 20,382 24,895

EBIDTA 4,990 4,963 3,703 4,743

EBIDTA margin (%) 16.5 16.9 15.4 16.0

Other income 1,594 1,494 1,673 1,606

Interest 4.5 3.3 3.8 3.8

Depreciation 266 246 291 339

Profit Before Tax 6,703 6,207 5,082 6,006

Tax 2,028 1,406 1,270 1,501

Reported Net Profit 4,675 4,801 3,811 4,504

Net Margin (%) 15.5 16.3 15.8 15.2

Adjusted Net Profit 4,404 4,801 3,811 4,504

Source: Company, Axis Securities

Balance Sheet (Rs Cr)

Y/E Mar FY19 FY20E FY21E FY22E

Equity capital 289.4 289.4 289.4 289.4

Reserves & surplus 21,491 22,447 22,414 23,073

Shareholders’ funds 21,780 22,736 22,703 23,363

Total Loans 126 126 126 126

Deferred tax liability 543 543 543 543

Total Liabilities and Equity 22,448 23,405 23,371 24,031

Gross block 4,253 4,714 5,330 5,980

Depreciation 2,508 2,754 3,045 3,384

Net block 1,745 1,961 2,285 2,595

Capital WIP 12 50 85 85

Investments 19,215 19,515 19,815 20,115

Inventory 962 937 782 955

Debtors 2,560 2,014 1,650 2,030

Cash & Bank Bal 923 1362 503 205

Loans & Advances 1,965 2,238 2,536 2,563

Current Assets 6,409 6,550 5,471 5,753

Sundry Creditors 4,278 4,017 3,630 3,863

Other Current Liability 654 654 654 654

Current Liability& Provisions 4,932 4,671 4,284 4,517

Net current assets 1,477 1,879 1,187 1,236

Total Assets 22,448 23,405 23,371 24,031

Source: Company, Axis Securities

Axis Securities 13

Bajaj Auto Ltd

Cash Flow Statement (Rs Cr)

Y/E Mar FY19 FY20E FY21E FY22E

EBIT 4,725 4,717 3,412 4,404

Other Income 1,594 1,494 1,673 1,606

Depreciation & Amortisation 266 246 291 339

Interest paid(-) -4 -3 -4 -4

Tax paid(-) (2,028) (1,406) (1,270) (1,501)

Extra Ord Income 389 0 0 0

Operating Cash Flow 4,941 5,047 4,102 4,844

Change in Working Capital (1,306) 37 (166) (348)

Cash flow from Operations 3,635 5,083 3,936 4,496

Capex (144) (500) (650) (650)

Non Strategic Investment (1,569) (300) (300) (300)

Cash flow from Investing (1,714) (800) (950) (950)

Change in borrowing 4 0 0 0

Other 2,064.6 0 0 0

Dividends paid(-) (3,844) (3,845) (3,845) (3,845)

Cashflow from Financial Activities (1,776) (3,845) (3,845) (3,845)

Change in Cash 145 439 (858) (299)

Opening cash 778 923 1362 503

Closing cash 923 1362 503 205

Source: Company, Axis Securities

Ratios (%)

Y/E Mar FY19 FY20E FY21E FY22E

Revenue Growth 19.9 -2.8 -18.1 23.1

EBITDA Margin 16.5 16.9 15.4 16.0

Net Profit Margin 14.6 16.3 15.8 15.2

ROCE (%) 19.2 19.3 15.1 17.6

ROE (%) 19.7 19.9 15.5 18.0

EPS( Rs) 152.2 166.0 131.8 155.7

P/E (x) 15.1 13.9 17.5 14.8

P/ BV (x) 3.1 2.9 2.9 2.8

EV/ EBITDA (x) 13.2 13.2 17.9 14.0

Fixed Assets Turnover Ratio (x) 17.2 14.6 10.2 11.1

Debt / Equity (x) 0.0 0.0 0.0 0.0

EV/ Sales (x) 2.2 2.3 2.8 2.3

Source: Company, Axis Securities

Axis Securities 14

Bajaj Auto Ltd

Disclosures:

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the

Regulations).

1. 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.

2. 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.

3. ASL has no material adverse disciplinary history as on the date of publication of this report. 4. I/We, Ankit Suchanti, MBA-Finance (IIM), 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 subject issuer(s) or securities. I/We (Research Analyst) also certify that no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. I/we or my/our relative or ASL does not have any financial interest in the subject company. Also I/we or my/our relative or ASL or its Associates may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Since associates of ASL are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. I/we or my/our relative or ASL or its associate does not have any material conflict of interest. I/we have not served as director / officer, etc. in the subject company in the last 12-month period.

Any holding in stock – No 5. ASL has not received any compensation from the subject company in the past twelve months. ASL has not been engaged in market making activity for the subject company.

6. In the last 12-month period ending on the last day of the month immediately preceding the date of publication of this research report, ASL

or any of its associates may have:

i. Received compensation for investment banking, merchant banking or stock broking services or for any other services from the

subject company of this research report and / or;

ii. Managed or co-managed public offering of the securities from the subject company of this research report and / or;

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ASL or any of its associates have not received compensation or other benefits from the subject company of this research report or any other

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Axis Securities 15

Bajaj Auto Ltd

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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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.

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Axis Securities Limited, Corporate office: Unit No. 2, Phoenix Market City, 15, LBS Road, Near Kamani Junction, Kurla (west), Mumbai-400070, Tel No. – 022-40508080/ 022-61480808, Regd. off.- Axis House, 8th Floor, Wadia International Centre, PandurangBudhkar Marg, Worli, Mumbai – 400 025. Compliance Officer: AnandShaha, Email: compliance.officer@axisdirect.in, Tel No: 022-42671582.SEBI-Portfolio Manager Reg. No. INP000000654