Bajaj Auto Ltd

Presented by:ANKIT KUMAR GUPTABajaj Auto Ltd

Automobile Industry in India

The automobile industry in India is expected to be the world's third largest by 2016, with the country currently being the world's second largest two-wheeler manufacturer.Two-wheeler production is projected to rise from 18.5 million in FY15 to 34 million by FY20. Automobile exports grew at a CAGR of 14.65 per cent during 2010-15. Two wheelers accounted for the largest share of exports at 69.4 per cent in FY15.Exports of three wheeler vehicles registered around 11.1 per cent share in exports in FY15.The government aims to develop India as a global manufacturing as well as a research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as a National Automotive Board to act as facilitator between the government and the industry.

BAJAJ AUTO LTDManufacturers of Scooters, Motor Bikes, 3-Wheelers, Spare parts.Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj Trading Corporation Private Limited. Initially it used to import the two wheelers from outside, but from 1959 it started manufacturing of two wheelers in the country. It is India's largest and the world's 4th largest two- and three-wheeler maker. It offers products in all motorcycle segmentsPlatina (entry), Discover (executive) and Pulsar (premium).

SEGMENT INFORMATION(a) Primary segment: Business segment ( Rs in Crore)i. Automotive- Total Revenues is 21,821.26ii. Investments- Total Revenues is 376.96

(b) Secondary segment: Geographic segment (Rs in Crore)i. India- Total Revenues is 12,432.38ii. Rest of the world- Total Revenues is 9,765.84

Motorcycle highlightsPARTICULARSH12015-16H12014-15FULL YEAR2014-15Domestic955,148952,4921,770,778Export823,184821,5191,521,306Total1,778,3321,774,0113,292,084

Commercial vehicle highlightsPARTICULARSH12015-16H12014-15FULL YEAR2014-15Domestic117,832130,460234,345Export173,461139,541284,772Total291,293270,001519,117

i. M1 Mileage segmentBajaj, represented by CT100 and Platina, in the segment showed a remarkable growth of 74% in H1/2015-16 over H1/2014-15.ii. Sports segmentBajaj is represented by Pulsar and Avenger in the segment.With sales of around 326,000 units in this segment of the domestic market, Bajaj Auto continues to be a leader with market share of 44%.iii. Super sports segmentBajaj is represented by Pulsar RS200 and KTM in the segment.Together with KTM, Bajaj Auto dominates this segment with sales of over 36,000 units in H1/2015-16and is a market leader with share in domestic market of over 63%.Motorcycle Segment

Forecast Revenue for FY 2016 Quarterly (in Rs. Cr.) PARTICULARSDec '15Forcasted Mar-16NotesNet Sales/Income from operations5,564.905787.496(A)

EXPENDITUREConsumption of Raw Materials3,383.433434.18145(B)Purchase of Traded Goods345.26350.4389(B)Employees Cost230.24234.8448(C)Other Expenses471.29480.7158(C)P/L Before Other Inc. , Int., Excpt. Items & Tax1,096.621287.31505Other Income199.68199.68(D)P/L Before Int., Excpt. Items & Tax1,296.301486.99505Interest0.070.05P/L Before Tax1,296.231486.945Tax394.74446.08(E)Net Profit/(Loss) For the Period901.491040.865(F)

NOTES (Key Assumptions):-(A)For the industry as a whole, the number of motorcycles sold in India grew by merely 2.5% in FY2015.Total motorcycle sales in India plus exports grew by 4.3% in FY2015.Exports, in terms of the number of two-and three-wheelers, increased by 14% to 1.81 million units. In terms of value, exports grew by 14.6% to US$ 1.5 billion.We expect the Net Sales to increase by 4% for the next quarter as the overall growth is 7% in FY2015.It sold over 284,000 vehicles in FY2015 representing a 9.2% growth in exports. BAL continues as Indias largest exporter of three-wheelers and, in volume terms, accounted for 70% of such exports.

(B)The Company also imports raw materials and components for its motorcycles etc.We expect the Consumption of Raw materials and purchase of trade goods to go up by 1.5% for the next quarter.Spare sales grew 11% YoY and 12% on YTD basis. (C)We expect Employee cost and other expenses to rise up by 2% as per expansion plans.With launch of V150, it plans to upgrade consumers from 100cc to 125cc executive segment. (D)Most of the commodity benefits were realised in 1HFY15. Saw marginal benefits in Q3FY15 from lower aluminum and steel prices. Could see some benefit in FY16 as well. Other Income is assumed to remain the same.

(E)Tax rate is taken at 30%.

(F)Net Profit is estimated to increase to 1210 croes for the next quarter. The Companys current installed capacity is 6.06 million units per annum. The Company plans to increase the installed capacity to around 6.12 million units per annum by March 2016.New permits opportunity for 3Ws could be in the range of 40-50K units for FY17 in domestic market. Expects to dispatch 1,500 units of goods version in Feb and March. Thereafter, expects a steady run rate of 1500 units a month. Initially, goods version will be launched in domestic market.

STOCK PERFORMANCE

CONCLUSIONBajaj Auto is a diversified play with domestic motorcycle, three wheeler and export portfolio. We can expect it to be the key beneficiary of new launches (initial success in the Economy/Premium segment visible), rising premiumisation in motorcycles and huge potential in export markets. The Company has continued with its strong performance.

Sheet1Automobile Exports TrendsDomestic Market Share for 2014-15%Passenger Vehicles13Category2009-102010-112011-122012-132013-142014-15Commercial Vehicles3Passenger Vehicles4,46,1454,44,3265,08,7835,59,4145,96,1426,22,470Three Wheelers3Commercial Vehicles45,00974,04392,25880,02777,05085,782Two Wheelers81Three Wheelers1,73,2142,69,9683,61,7533,03,0883,53,3924,07,957Grand Total100Two Wheelers11,40,05815,31,61919,75,11119,56,37820,84,00024,57,597Grand Total18,04,426 23,19,956 29,37,905 28,98,907 31,10,58435,73,806

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