RESULT UPDATE

BAJAJ AUTO Strong show in a tough environment

India Equity Research| Automobiles

COMPANYNAME Bajaj Auto’s (BJAUT) Q2FY20 EBITDA of INR12.7bn (down 6.6% YoY) EDELWEISS 4D RATINGS

surpassed our estimate 15% driven by significant improvement in Absolute Rating HOLD realisation. Post a bleak Q2FY20, near-term demand outlook has Rating Relative to Sector Underperform improved, triggered by the festive season as well as clarity on GST rate Risk Rating Relative to Sector Low cut. With current inventory at 60 plus days and the BS VI transition Sector Relative to Market Overweight

around the corner, sustained bounce-back in demand remains key. Near- term export growth is likely to find some support from new product launches (Pulsar NS) as well as resumption of 3W exports to a few key MARKET DATA (R: BAJA.BO, B: BJAUT IN) markets (Egypt). However, we expect margin to remain range bound as CMP : INR 3,163 Target Price : INR 3,177 sustained improvement in mix is likely to be offset by rising share of 52-week range (INR) : 3,237 / 2,400 exports and BS VI transition costs. Maintain ‘HOLD’ with revised TP of Share in issue (mn) : 289.4 INR3,163 (earlier INR2,988) as we roll over to 12x March 2021E EPS. M cap (INR bn/USD mn) : 915 / 12,905 Avg. Daily Vol.BSE/NSE(‘000) : 533.6 Q2FY20: Strong show

Net revenue at INR77bn (down 4% YoY) was 5% ahead of estimate due to 5% SHARE HOLDING PATTERN (%)

QoQ improvement in ASP. Strong ASP growth was driven by higher share of 110/125cc Current Q1FY20 Q4FY19 and domestic 3W sales. EBITDA margin at 16.1% surpassed our estimate Promoters * 53.5 53.5 51.2

of 15.1% driven by revenue beat as well as lower-than-expected staff costs. PAT beat MF's, FI's & BK’s 8.6 8.6 7.4 of ~19% was due to higher than expected benefits of the corporate tax cuts from the FII's 14.6 14.6 15.6 previous quarter. Others 23.3 23.3 25.8 * Promoters pledged shares : 0.9 (% of share in issue) Margin to remain range bound

We expect improvement in product mix (higher share of 110/125cc motorcycles) to PRICE PERFORMANCE (%) drive BJAUT’s market share gains going forward. However, the volatile demand Stock Nifty EW Auto Index environment could limit the company’s ability to pass on BS VI costs, mitigating margin 1 month 5.2 4.2 4.9 improvement due to a better mix. 3 months 10.7 (1.7) (1.4)

12 months 15.8 8.3 (15.9) Outlook and valuation: BS VI transition key; maintain ‘HOLD’

We estimate FY19–21 volume CAGR of only 5.0% factoring volatile demand environment and uncertainty due to upcoming BS VI transition. We maintain ‘HOLD/SO’ with TP of INR3,163, valuing the stock at 16x March 2021E core EPS, cash/ share of INR802 and KTM at INR100. The stock is trading at 20.6x/17.9x FY20/21E EPS.

Financials (INR mn) Year to March Q2FY20 Q2FY19 % Chg Q1FY20 % Chg FY19 FY20E FY21E Chirag Shah +91 22 6623 3367 Total operating Income 77,073 80,118 (3.8) 77,558 (0.6) 302,501 323,255 360,697 [email protected] EBITDA 12,781 13,680 (6.6) 11,982 6.7 49,821 53,000 58,908 Adjusted Profit 14,024 11,525 21.7 11,257 24.6 44,367 51,035 57,043 Jay Mehta +91 22 4088 6072 Adjusted Diluted EPS 48.5 39.8 21.7 38.9 24.6 153.3 176.4 197.1 [email protected]

Diluted P/E (x) 20.6 17.9 16.0 EV/EBITDA (x) 14.6 13.3 11.6 ROAE (%) 21.7 22.5 22.9 October 23, 2019

Edelweiss Research is also available on www.edelresearch.com, Edelweiss Securities Limited Bloomberg EDEL , Thomson First Call, Reuters and Factset.

Automobiles

Key highlights from the Q2FY20 conference call and management’s TV interview Key highlights

 Management expects the 2W industry’s growth to be flat to marginally negative in FY20, caveats being: 1) sustained pick up in festive season; and 2) no BSVI pre-buying.

 Demand: Some green shots from second half of September. Clarity on GST rate cut has helped. Festive season has also been a trigger for demand improvement. Expects volume growth in the current festive season to be in line with previous festive season (by the time Diwali is done).

 Retail sales trend: Retail sales are now flattish to marginally negative (double-digit decline a few months ago). Retail sales have picked up in October.

 Incentives: Range from INR1,500-5,000 depending upon the model. These are not entirely given in the form of cash discounts. Not increased incentives meaningfully in the festive season.

 Outlook on profitability: Commodity costs and exchange rates are stable, but overall demand situation still remains relatively volatile (for instance, there could be pre or postponement of demand due to BS VI). So difficult to give exact guidance, but margin trajectory should move upwards.

 Inventory

1. Current inventory is at 60 plus days (normal 35-40).

2. Inventory level right now is exactly the same as it was in October 2018.

3. Has been relatively constant between June and September.

4. However, the company is not worried about these levels given the ongoing festive season.

5. Target is to bring it to normal level over the next couple of months.

6. Aim is to have primarily BS VI inventory from Q1FY20.

7. Inventory at factory is very low.

 Tax rate for the full year should be 24-25%.

 Exports revenue: INR3,108mn in Q2FY20 versus INR3,123mn in Q2FY19.

 Spare revenue: INR7,930mn in Q2FY20 versus INR8,110mn in Q2FY19.

 2W exports: Bajaj continues to outperform in markets where it competes. Has garnered 2.5% points market share in overall 2W exports.

Margin

 Gross margin improvement:

1. QoQ, 50-60% improvement from product mix, while balance was contributed by raw material prices.

2. Expects commodity costs to remain benign in Q3FY20. May get some benefit from these. Steel price may be beneficial, but ferrous prices could be a headwind. At this juncture, management expects commodity costs to be a net benefit in Q3FY20.

2 Edelweiss Securities Limited Bajaj Auto

 Segmental margin unlikely to decline QoQ in Q3FY20.

 Blended margin will still be decided on the basis of the final mix over the next three months.

Realisation

 Currency benefit was ~0.5%; balance is due to mix improvement (higher share of 110/12cc motorcycles) and price increase.

 Took calibrated price hikes in Q2FY20. Took one in July and another in September (hike of about 1.0-1.5% in the sports segment in September).

 In the domestic market, mix between 2W and 3W has tilted in favour of 3W, which has helped realisation.

BS VI update

 Phasing out of BS IV inventory has started from the current month.

 The company will not artificially advance sales to liquidate BS IV inventory (assuming competition does not either).

 There will be no major change in overheads (negative operating leverage) due to any change in production in Q3FY20.

Financing

 Seen uptick in financing for Bajaj Auto.

 Currently finance penetration is at 70% (more than 50% is from ) versus 65% in Q1FY20.

3W

 Domestic 3W sales have received a boost from the festive season.

 Egypt: Retail sales have now settled from the high of 8k to ~3k per month. The company has not exported to Egypt in the past six months as it was destocking inventory; exports have now resumed.

 Cargo segment: BS VI should be a tailwind for Bajaj as some of the traditionally used 4W will become too expensive post BS VI.

Market share

 Market share has stabilised in recent months, but this should be seen in context of a sharp slowdown in the industry.

 The company has, however, managed to reshape its portfolio.

 Once industry revives (or settles down), management expects to make market share gains.

Product launches

 Has a strong product pipeline for the next 18 months, but there may be a slight lull in the launch activity until BS VI.

3 Edelweiss Securities Limited Automobiles

 The company has yet to take a call on the launch sequence and will take it only post BS VI.

Pulsar

 The ABS mandate has been a tailwind for the 125cc motorcycle segment. So Bajaj has decided to introduce the 125cc Pulsar.

 Export growth: Pulsar 160 NS and 200 MS are key drivers of export growth.

EV

 Forecasting demand is difficult in this space given multiple variables.

 The strategy is to secure a first-mover advantage, atleast among established OEMs.

 Pricing will be announced closer to January.

Promotion accounting

 Spends on promotion this year have been less compared to last year.

 Netting off on the topline (as per accounting guidelines) has reduced this year, while other expenses have jumped.

Husqvarna

 Will start production by FY20-end (in Q4FY20) and target export markets.

 Expects domestic launch in Q1FY21.

Triumph

 Talks are on and both the companies are close to signing a partnership agreement.

Profitability of product launches

 All new launches (Platina 110 for example) are more profitable than their existing peers within the same group.

4 Edelweiss Securities Limited Bajaj Auto

Table 1: Volume assumptions Particulars FY18 FY19 FY20E FY21E Domestic 23,44,214 29,40,903 28,69,353 31,24,381 Two-wheeler 19,74,577 25,41,450 24,89,872 27,25,926 Three-wheeler 3,69,637 3,99,453 3,79,480 3,98,454 Exports 16,62,577 20,78,730 21,70,021 24,07,893 Two-wheeler 13,94,757 16,95,553 18,48,153 20,69,931 Three-wheeler 2,67,820 3,83,177 3,21,869 3,37,962

Total 40,06,791 50,19,633 50,39,374 55,32,274 % YoY Domestic 4.0 25.5 (2.4) 8.9 Two-wheeler (1.3) 28.7 (2.0) 9.5 Three-wheeler 46.0 8.1 (5.0) 5.0 Exports 17.8 25.0 4.4 11.0 Two-wheeler 14.5 21.6 9.0 12.0 Three-wheeler 38.9 43.1 (16.0) 5.0

Total 9.3 25.3 0.4 9.8 Product-mix (% total sales) Domestic 58.5 58.6 56.9 56.5 Two-wheeler 49.3 50.6 49.4 49.3 Three-wheeler 9.2 8.0 7.5 7.2 Exports 41.5 41.4 43.1 43.5 Two-wheeler 34.8 33.8 36.7 37.4 Three-wheeler 6.7 7.6 6.4 6.1 Total 100.0 100.0 100.0 100.0 Forex USD/INR forex cover rate 67.0 69.0 72.0 72.0 Source: Edelweiss research

Table 2: Valuations Particulars Mar2021E Core EPS Mar2020E (INR) 141 Earnings multiple (x) 16.0 Fair value (INR) 2,261 Cash per share (INR) 802 Value of KTM per share (INR) 100 Total fair value per share (INR) 3,163 Source: Edelweiss research

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Chart 1: Domestic realizations trend Chart 2: Exports realization trend 75 20.0 60 9.0

70 12.0 56 5.0

65 4.0 52 1.0 (% YoY) (% 60 (4.0) YoY) (%

INR''000) 48 (3.0)

INR''000)

( (

55 (12.0) 44 (7.0) 50 (20.0)

40 (11.0)

Q1FY18 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20

Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Domestic realization % YoY (RHS) Export realization % YoY (RHS)

Source: Company, Edelweiss research

Chart 3: Trend is domestic motorcycle mix Chart 4: EBITDA margin trend 100.0 22.0

80.0 37 39 37 38 42 41 48 42 43 44 41 49 47 46 20.0 60.0 5 4 9 9 18.0 20 15 15 15 9 3 3 2 (%) 18 40.0 16 (%) 16.0 58 52 50 58 50 53 20.0 42 43 44 44 48 48 36 38 14.0 0.0

12.0

Q1FY18 Q3FY19 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q4FY19 Q1FY20 Q2FY20

Q1FY17 Q4FY17 Q3FY18 Q2FY19 Q1FY20 Q2FY17 Q3FY17 Q1FY18 Q2FY18 Q4FY18 Q1FY19 Q3FY19 Q4FY19 Q2FY20 Economy Executive Premium EBITDA margins

Source: Company, Edelweiss research

6 Edelweiss Securities Limited Bajaj Auto

Financial snapshot (INR mn) Year to March Q2FY20 Q2FY19 % change Q1FY20 % change YTD20 FY20E FY21E Total units sold (nos) 1,173,591 1,339,444 (12.4) 1,247,174 (5.9) 2,420,765 5,039,374 5,532,274 Realization 63,900 58,470 9.3 60,657 5.3 63,877 64,146 65,199 Total operating Income 77,073 80,118 (3.8) 77,558 (0.6) 154,631 323,255 360,697 Raw material costs 54,370 57,829 (6.0) 55,638 (2.3) 110,008 229,590 257,662 Staff costs 3,384 3,119 8.5 3,605 (6.2) 6,989 14,139 15,350 Other expenses 6,539 5,490 19.1 6,333 3.3 12,872 26,525 28,777 Total expenditure 64,293 66,438 (3.2) 65,576 (2.0) 129,869 270,254 301,789 EBITDA 12,781 13,680 (6.6) 11,982 6.7 24,763 53,000 58,908 Depreciation 613 715 (14.2) 601 2.0 1,215 2,651 2,863 EBIT 12,167 12,965 (6.2) 11,381 6.9 23,548 50,349 56,045 Interest 12 3 300.0 5 129.6 18 30 10 Other income 3,934 3,565 10.4 4,413 (10.8) 8,347 17,882 20,195 Add: Prior period items Add: Exceptional items Profit before tax 16,089 16,527 (2.6) 15,788 1.9 31,877 68,201 76,230 Tax 2,065 5,002 (58.7) 4,531 (54.4) 6,596 17,166 19,187 Minority interest Associate profit share Reported net profit 14,024 11,525 21.7 11,257 24.6 25,281 51,035 57,043 Adjusted Profit 14,024 11,525 21.7 11,257 24.6 25,281 51,035 57,043 Diluted shares (mn) 289 289 289 289 - - Adjusted Diluted EPS 48.5 39.8 21.7 38.9 24.6 87.4 176.4 197.1 Diluted P/E (x) - - - - 17.9 16.0 EV/EBITDA (x) - - - - 13.3 11.6 ROAE (%) - - - - 22.5 22.9 Raw material 70.5 72.2 71.7 71.1 71.0 71.4 Employee cost 4.4 3.9 4.6 4.5 4.4 4.3 Other expenditure 8.5 6.9 8.2 8.3 8.2 8.0 EBITDA 16.6 17.1 15.4 16.0 16.4 16.3 Adjusted net profit 18.2 14.4 14.5 16.3 15.8 15.8 Tax rate 12.8 30.3 28.7 20.7 25.2 25.2

7 Edelweiss Securities Limited Automobiles

Company Description Bajaj Auto (BJAUT) is the second largest motorcycle manufacturer in . It offers products in all motorcycle segments—Platina (entry), Discover (executive) and Pulsar (premium). It is also the largest three-wheeler manufacturer in India. Post the demerger in May 2008, BAL has been solely focused on the automobile business. In the past few years, the company has shown strong growth in exports that now forms nearly 40% of its total volumes.

Investment Theme BJAUT is a diversified play with domestic motorcycle, three wheeler and export portfolio. Company's ability to sustain profitability despite weak volumes/export headwinds remains commendable. Going ahead, we 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.

Key Risks Poor execution track-record Despite host of new launches in executive segment, volumes declined sharply in FY15. A new brand is expected to be launched in executive segment in H2FY16. Success remains critical for volumes to rebound

Increasing competition leading to margin headwinds Intense competition in the domestic market can impact profitability. However, company's focus on margins rather than market share allays risks to certain extent

Problems in exports market Export markets continue to be plagued by country specific issues - election/ adverse currency. Any disruption in key African market could affect exports numbers.

8 Edelweiss Securities Limited Bajaj Auto

Financial Statements Key Assumptions Income statement (INR mn) Year to March FY18 FY19 FY20E FY21E Year to March FY18 FY19 FY20E FY21E Macro Total volume (nos) 4,006,791 5,019,633 5,039,374 5,532,274 GDP(Y-o-Y %) 6.7 7.1 7.1 7.3 % Growth in volume 9.3 25.3 0.4 9.8 Inflation (Avg) 3.6 3.7 4.0 4.5 Income from operations 251,649 302,501 323,255 360,697 Repo rate (exit rate) 6.0 6.3 5.8 5.8 Materials costs 174,101 218,243 229,590 257,662 USD/INR (Avg) 64.5 70.0 72.0 72.0 Manufacturing expenses 6,788 7,230 7,874 8,655 Sector Employee costs 10,691 12,554 14,139 15,350 Motorcycle - Domestic 13.7 7.7 2.0 7.0 Total SG&A expenses 12,235 14,652 18,651 20,121 3-wheeler (Passenger) - Domestic 24.9 9.4 (6.0) 3.0 Total operating expenses 203,815 252,679 270,254 301,789 Steel prices (INR/t) 34,670 40,300 40,300 40,300 EBITDA 47,834 49,821 53,000 58,908 Aluminium prices (USD/t) 1,675 1,880 1,880 1,880 Depreciation 3,148 2,657 2,651 2,863 Company EBIT 44,686 47,164 50,349 56,045 Motorcycle - Domestic (1.3) 28.7 2.0 8.2 Less: Interest Expense 13 45 30 10 3-wheeler (Passenger) - Domestic 46.0 8.1 (5.0) 4.0 Add: Other income 13,472.5 16,493.09 17,882.00 20,194.84 Motorcycle - Exports 14.5 21.6 9.0 10.0 Profit Before Tax 57,826 67,033 68,201 76,230 3-wheeler (Passenger) - Exports 38.9 43.1 (11.0) 5.0 Less: Provision for Tax 17,145 20,280 17,166 19,187 Avg realisation (INR) 54,867 52,426 54,735 55,994 Add: Exceptional items (320) 3,420 - - Avg realisation (% YoY) 5.7 (4.4) 4.4 2.3 Reported Profit 40,681 46,753 51,035 57,043 RM cost/vehicle 43,451 43,478 44,749 45,529 Exceptional Items 225 2,385 - - Average salary 1,125,003 1,223,825 1,358,446 1,467,122 Adjusted Profit 40,456 44,367 51,035 57,043 Promotion cost (% revenue) 2.2 1.9 2.1 2.1 Shares o /s (mn) 289 289 289 289 EBITDA/vehicle 11,938 9,925 9,920 10,093 Adjusted Basic EPS 139.8 153.3 176.4 197.1 Depreciation rate (%) 7.1 5.8 5.3 5.3 Diluted shares o/s (mn) 289 289 289 289 B/S assumptions Adjusted Diluted EPS 139.8 153.3 176.4 197.1 Tax rate (%) 29.6 30.3 30.0 30.0 Adjusted Cash EPS 150.7 162.5 185.5 207.0 Dividend payout (%) 50.0 43.5 68.8 62.7 Dividend per share (DPS) 60.0 60.0 95.0 95.0 Capex (INR mn) (390) 1,445 4,000 4,000 Dividend Payout Ratio(%) 50.0 43.5 63.0 56.4 Debtor days 18 24 30 30

Inventory days 15 14 15 15 Common size metrics Payable days 57 59 62 61 Year to March FY18 FY19 FY20E FY21E Cash conversion cycle (25) (21) (17) (16) Materials costs 69.2 72.1 71.0 71.4 Staff costs 4.2 4.2 4.4 4.3 S G & A expenses 4.9 4.8 5.8 5.6 Operating expenses 81.0 83.5 83.6 83.7 Depreciation 1.3 0.9 0.8 0.8 Interest Expense - - - - EBITDA margins 19.0 16.5 16.4 16.3 Net Profit margins 16.1 14.7 15.8 15.8

Growth ratios (%) Year to March FY18 FY19 FY20E FY21E Revenues 15.6 20.2 6.9 11.6 EBITDA 8.2 4.2 6.4 11.1 PBT 8.4 15.9 1.7 11.8 Adjusted Profit 5.7 9.7 15.0 11.8 EPS 5.7 9.7 15.0 11.8

9 Edelweiss Securities Limited Automobiles

Balance sheet (INR mn) Cash flow metrics As on 31st March FY18 FY19 FY20E FY21E Year to March FY18 FY19 FY20E FY21E Share capital 2,894 2,894 2,894 2,894 Operating cash flow 42,608 24,895 35,170 40,188 Reserves & Surplus 188,145 214,905 233,764 258,631 Financing cash flow (18,853) (20,741) (32,206) (32,186) Shareholders' funds 191,039 217,799 236,658 261,525 Investing cash flow (19,180) (2,441) (5,118) (4,805) Def. Tax Liability (net) 3,234 5,427 4,527 4,527 Net cash Flow 4,575 1,714 (2,154) 3,197 Sources of funds 194,273 223,226 241,185 266,051 Capex 390 (1,445) (4,000) (4,000) Gross Block 44,491 46,021 50,021 54,021 Dividend paid (20,322) (20,322) (32,176) (32,176) Net Block 18,212 17,084 18,433 19,570

Capital work in progress 565 480 480 480 Profitability and efficiency ratios Total Fixed Assets 18,777 17,565 18,914 20,050 Year to March FY18 FY19 FY20E FY21E Non current investments 12,227 12,227 10,227 10,227 ROAE (%) 22.4 21.7 22.5 22.9 Cash and Equivalents 171,836 188,975 207,822 232,018 ROACE (%) 32.2 31.1 30.0 30.6 Inventories 7,426 9,615 10,292 11,495 Inventory Days 15 14 15 15 Sundry Debtors 14,919 25,597 27,400 30,602 Debtors Days 18 24 30 29 Loans & Advances 369 380 406 454 Payable Days 57 59 62 61 Other Current Assets 10,954 17,749 17,749 17,749 Cash Conversion Cycle (25) (21) (17) (16) Current Assets (ex cash) 33,667 53,341 55,848 60,301 Current Ratio 4.9 5.0 5.1 5.2 Trade payable 32,443 37,867 40,501 45,227 Net Debt/Equity (0.9) (0.9) (0.9) (0.9) Other Current Liab 9,792 11,015 11,124 11,319 Interest Coverage Ratio 3,411.2 1,052.8 1,678.3 5,604.5 Total Current Liab 42,235 48,882 51,626 56,546

Net Curr Assets-ex cash (8,568) 4,459 4,222 3,755 Operating ratios Uses of funds 194,273 223,226 241,185 266,051 Year to March FY18 FY19 FY20E FY21E BVPS (INR) 660.2 752.7 817.8 903.8 Total Asset Turnover 1.4 1.4 1.4 1.4 Fixed Asset Turnover 13.4 17.1 18.2 19.0

Free cash flow (INR mn) Equity Turnover 1.4 1.5 1.4 1.4 Year to March FY18 FY19 FY20E FY21E

Reported Profit 40,681 46,753 51,035 57,043 Valuation parameters Add: Depreciation 3,148 2,657 2,651 2,863 Year to March FY18 FY19 FY20E FY21E Interest (Net of Tax) 9 31 22 7 Adj. Diluted EPS (INR) 139.8 153.3 176.4 197.1 Others 10,262 (37,572) (18,302) (19,258) Y-o-Y growth (%) 5.7 9.7 15.0 11.8 Less: Changes in WC 11,493 (13,026) 236 467 Adjusted Cash EPS (INR) 150.7 162.5 185.5 207.0 Operating cash flow 42,608 24,895 35,170 40,188 Diluted P/E (x) 22.6 20.6 17.9 16.0 Less: Capex (390) 1,445 4,000 4,000 P/B (x) 4.8 4.2 3.9 3.5 Free Cash Flow 42,998 23,451 31,170 36,188 EV / Sales (x) 2.9 2.4 2.2 1.9 EV / EBITDA (x) 15.5 14.6 13.3 11.6

Dividend Yield (%) 1.9 1.9 3.0 3.0

Peer comparison valuation Market cap Diluted P/E (X) EV / EBITDA (X) P/B (X) Name (USD mn) FY20E FY21E FY20E FY21E FY20E FY21E Bajaj Auto 12,905 17.9 16.0 13.3 11.6 3.9 3.5 7,897 25.4 20.5 19.0 14.6 5.2 4.3 Hero MotoCorp 7,641 16.4 14.2 10.0 8.6 3.9 3.6 Median - 17.9 16.0 13.3 11.6 3.9 3.6 AVERAGE - 19.9 16.9 14.1 11.6 4.3 3.8 Source: Edelweiss research

10 Edelweiss Securities Limited Bajaj Auto

Additional Data Directors Data Rahul Bajaj Chairman Madhur Bajaj Non-Executive Director Managing Director Non-Executive Director Shekhar Bajaj Non-Executive Director D J Balaji Rao Non-Executive Independent Director Nanoo Pamnani Non-Executive Independent Director Anami Roy Non-Executive Independent Director Dr. Naushad Forbes Non-Executive Independent Director Dr. Omkar Goswami Non-Executive Independent Director Niraj Bajaj Non-Executive Director Pradeep Shrivastava Executive Director Dr. Gita Piramal Non-Executive Independent Director rakesh sharma Non-Executive Director Lila Poonawalla Non-Executive Independent Director Pradip Shah Non-Executive Independent Director

Auditors - SRBC & Co LLP *as per last annual report

Holding – Top10 Perc. Holding Perc. Holding Bajaj holdings and i 33.43 Jamnalal sons pvt lt 8.95 Life insurance corp 4.6 Jaya hind industries 3.35 scooters 2.34 Bajaj sevashram limi 1.54 Norges bank 1.38 Bachhraj & co ltd 1.26 Sbi funds management 1.09 Government pension f 1.09

*in last one year

Bulk Deals Data Acquired / Seller B/S Qty Traded Price

No Data Available

*in last one year

Insider Trades Reporting Data Acquired / Seller B/S Qty Traded 01 Apr 2019 Bajaj Holdings & Investment Limited Buy 615142.00 29 Mar 2019 Bajaj Holdings & Investment Limited Buy 234858.00 27 Mar 2019 Bajaj Holdings & Investment Limited Buy 204000.00 22 Mar 2019 Bajaj Holdings & Investment Limited Buy 500000.00 20 Mar 2019 Bajaj Holdings & Investment Limited Buy 230105.00

*in last one year

11 Edelweiss Securities Limited RATING & INTERPRETATION

Company Absolute Relative Relative Company Absolute Relative Relative reco reco risk reco reco Risk Amara Raja Batteries HOLD None None BUY SO H Bajaj Auto HOLD SU L Ceat Ltd HOLD SP None Eicher Motors BUY SO M BUY None None Hero MotoCorp HOLD SU H Mahindra & Mahindra Ltd BUY SO M Maruti India Ltd REDUCE SU H Minda Corporation BUY SO M BUY SO H Suprajit Engineering HOLD None H Ltd HOLD SP H

ABSOLUTE RATING

Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING

Ratings Criteria Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return

12 Edelweiss Securities Limited Bajaj Auto

Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098. Board: (91-22) 4009 4400, Email: [email protected]

Aditya Narain

Head of Research [email protected]

Coverage group(s) of stocks by primary analyst(s): Automobiles Ashok Leyland, Amara Raja Batteries, Bajaj Auto, Ceat Ltd, Eicher Motors, Exide Industries, Hero MotoCorp, Minda Corporation, Mahindra & Mahindra Ltd, India Ltd, Motherson Sumi Systems, Suprajit Engineering, Tata Motors Ltd

Recent Research

Date Company Title Price (INR) Recos

23 -Oct-19 Ceat Margin springs pleasant 961 Hold surprise; positive FCF critical; Result Update 11-Oct-19 Automobiles Festive season starts on a sombre note; Sector Update 03-Oct-19 Mahindra & Ford JV: Near term benefits 557 Buy Mahindra visible; long term hazy; Event Update

Distribution of Ratings / Market Cap Edelweiss Research Coverage Universe Rating Interpretation

Buy Hold Reduce Total Rating Expected to

Rating Distribution* 161 67 11 240 Buy appreciate more than 15% over a 12-month period * 1stocks under review Hold appreciate up to 15% over a 12-month period > 50bn Between 10bn and 50 bn < 10bn 743 Reduce depreciate more than 5% over a 12-month period Market Cap (INR) 156 62 11 594

One year price chart 446 3,450

(INR) 297 3,200

149 2,950

- (INR) 2,700

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13 Edelweiss Securities Limited

Automobiles

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Bajaj Auto

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Automobiles

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