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					                                                                                                    3QFY2012 Result Update | Automobile
                                                                                                                               January 19, 2012



 Bajaj Auto                                                                                          BUY
                                                                                                     CMP                                `1,467
 Performance Highlights                                                                              Target Price                       `1,755
 Y/E March (` cr)             3QFY12        3QFY11      % chg (yoy)         Angel est.     % diff    Investment Period              12 Months
 Net sales                      5,063        4,177                21.2            4,920      2.9
 EBITDA                         1,061          849                25.0             984       7.9    Stock Info
 EBITDA margin (%)                 21.0       20.3            63bp                 20.0     97bp    Sector                           Automobile
 Reported PAT                      795         667                19.2             791       0.5    Market Cap (` cr)                        46,759
 Source: Company, Angel Research                                                                    Beta                                        0.7
                                                                                                    52 Week High / Low              1,695/1,190
 Bajaj Auto (BJAUT) posted strong results for 3QFY2012, largely in-line with our
 estimates, driven by robust performance on the exports front. Exports revenue                      Avg. Daily Volume                    53,959

 grew by 51.1% yoy (down 1.3% qoq), benefitting from price increases and                            Face Value (`)                              10
 favorable currency movement leading to better-than-expected EBITDA margin at                       BSE Sensex                           16,937
 21%. We broadly retain our revenue and EPS estimates for FY2012/13. Post the                       Nifty                                    5,092
 recent correction in the stock price, we recommend Buy on the stock.                               Reuters Code                        BAJA.BO
                                                                                                    Bloomberg Code                     BJAUT@IN
 Performance driven by robust exports growth: BJAUT reported strong 21.2% yoy
 (down 3.9% qoq) growth in net sales to `5,063cr, driven primarily by 51.1% yoy
 (down 1.3% qoq) growth in exports revenue. While export volumes witnessed                          Shareholding Pattern (%)
 robust 28.4% yoy (down 10.1% qoq) growth, export realization grew strongly by                      Promoters                                 50.0
 17.6% yoy (9.8% qoq), led by price increases and favorable currency movement.                      MF / Banks / Indian Fls                   17.2
 Domestic performance, however, was muted as volume and realization posted
                                                                                                    FII / NRIs / OCBs                         16.4
 moderate growth of 6.8% (down 6.2% qoq) and 1.2% yoy, respectively, leading to
                                                                                                    Indian Public / Others                    16.4
 domestic revenue growth of 8.1% yoy (down 5.5% mom). EBITDA margin
 surprised positively as it touched 21% (up 63bp yoy and 89bp qoq) on account of
 easing of raw-material prices and favorable currency movement on the exports                       Abs. (%)                  3m       1yr      3yr
 front. Thus, net profit posted strong 19.2% yoy (9.6% qoq) growth to `795cr.
                                                                                                    Sensex                   (8.5) (14.8)     65.7
 However, bottom-line growth, to some extent, was restricted as BJAUT reported
                                                                                                    Bajaj Auto            13.4       8.8 506.4
 mark-to-market (MTM) loss of `59cr relating to hedging contracts.

 Outlook and valuation: We continue to prefer BJAUT over Hero MotoCorp in the
 two-wheeler space, owing to its diversified business model, healthy revenue and
 earnings visibility and reasonable valuations. Post the recent fall in the stock price,
 BJAUT is trading at attractive valuations of 12.5x FY2013E earnings.
 We recommend Buy on the stock with a target price of `1,755, valuing it at 15x
 FY2013E earnings.
 Key financials
 Y/E March (` cr)                  FY2010         FY2011            FY2012E               FY2013E
 Net sales                         11,921          16,609                20,002            22,830
 % chg                               35.3             39.3                 20.4              14.1
 Adj. profit                        1,784            2,750                3,025             3,385
 % chg                              132.0             54.1                 10.0              11.9
 Adj. OPM (%)                        20.2             19.7                 20.2              19.4
 EPS (`)                             61.7             95.0                104.5             117.0
 P/E (x)                             24.9             15.4                 14.0              12.5
 P/BV (x)                            14.5              8.6                  6.9               5.3
 RoE (%)                             74.4             70.2                 54.7              47.8
 RoCE (%)                            58.8             66.2                 67.3              58.6
                                                                                                    Yaresh Kothari
 EV/Sales (x)                         3.3              2.2                  1.8               1.5
                                                                                                    022-39357800 Ext: 6844
 EV/EBITDA (x)                       16.5             11.4                  8.9               7.7   yareshb.kothari@angelbroking.com
 Source: Company, Angel Research

Please refer to important disclosures at the end of this report                                                                                  1
                                                                                                     Bajaj Auto | 3QFY2012 Result Update



Exhibit 1: Quarterly financial performance
Y/E March (` cr)                         3QFY12         3QFY11       yoy chg (%)          2QFY12      qoq chg (%)    9MFY12      9MFY11    chg (%)
Net Sales                                     5,063       4,177                21.2         5,267           (3.9)     15,108     12,409      21.7
Consumption of RM                             3,360       2,822                19.0         3,562           (5.7)     10,212       8,376     21.9
(% of Sales)                                   66.4        67.6                              67.6                       67.6        67.5
Staff Costs                                    132         107                 23.9          131              0.7        402        347      15.8
(% of Sales)                                    2.6            2.6                            2.5                        2.7         2.8
Purchase of traded goods                       204         160                 27.4          199              2.3        580        446      30.1
(% of Sales)                                    4.0            3.8                            3.8                        3.8         3.6
Other Expenses                                 306         239                 28.3          317            (3.5)        884        716      23.5
(% of Sales)                                    6.0            5.7                            6.0                        5.9         5.8
Total Expenditure                             4,002       3,328                20.3         4,210           (4.9)     12,078       9,886     22.2
Operating Profit                              1,061        849                 25.0         1,057             0.4      3,030       2,523     20.1
OPM                                            21.0        20.3                              20.1                       20.1        20.3
Interest                                         0              0              (94)           20           (99.9)         20          2     1,148
Depreciation                                    32             31               3.6           39           (18.5)        102         93      10.1
Other Income                                    91             99              (8.7)          74             21.9        238        265     (10.0)
PBT (excl. Extr. Items)                       1,120        917                 22.1         1,072             4.5      3,145       2,694     16.8
Extr. Income/(Expense)                          59               -                 -          95           (38.3)        154           -         -
PBT (incl. Extr. Items)                       1,061        917                 15.7          977              8.6      2,991       2,694     11.0
(% of Sales)                                   21.0        22.0                              18.5                       19.8        21.7
Provision for Taxation                         266         250                  6.3          251              6.0        759        754       0.6
(% of PBT)                                     25.1        27.3                              25.7                       25.4        28.0
Reported PAT                                   795         667                 19.2          726              9.6      2,232       1,939     15.1
PATM                                           15.7        16.0                              13.8                       14.8        15.6
Equity capital (cr)                           289.4       289.4                             289.4                      289.4       289.4
EPS (`)                                        27.5        23.1                19.2          25.1             9.6       77.1        67.0     15.1
Source: Company, Angel Research


Exhibit 2: Quarterly volume performance
(units)                            3QFY12             3QFY11     yoy chg (%)            2QFY12      qoq chg (%)     9MFY12       9MFY11    chg (%)
Domestic                           694,529        650,228               6.8             740,353          (6.2)    2,099,983    1,947,854      7.8
Exports                            380,912        296,644              28.4             423,784         (10.1)    1,232,410     927,875      32.8
Total volumes                     1,075,441       946,872              13.6            1,164,137         (7.6)    3,332,393    2,875,729     15.9
Motorcycles
Domestic                           642,395        598,580               7.3             685,021          (6.2)    1,950,241    1,797,351      8.5
Exports                            304,354        239,929              26.9             342,336         (11.1)      986,916     753,021      31.1
Total motorcycles                  946,749        838,509              12.9            1,027,357         (7.8)    2,937,157    2,550,372     15.2
% of total volumes                     88.0             88.6                                88.3                       88.1         88.7
Three-wheelers
Domestic                            52,134            51,648            0.9              55,332          (5.8)      149,742     150,503      (0.5)
Exports                             76,558            56,715           35.0              81,448          (6.0)      245,494     174,854      40.4
Total three-wheelers               128,692        108,363              18.8             136,780          (5.9)      395,236     325,357      21.5
% of total volumes                     12.0             11.4                                11.7                       11.9         11.3
Source: Company, Angel Research




January 19, 2012                                                                                                                                 2
                                                                                                                                                                                           Bajaj Auto | 3QFY2012 Result Update



                                                                                                             Top-line growth driven by exports: BJAUT reported strong 21.2% yoy (down 3.9%
                                                                                                             qoq) growth in net sales to `5,063cr, driven largely by strong exports
                                                                                                             performance. While export volumes witnessed robust 28.4% yoy (down 10.1% qoq)
                                                                                                             growth, export realization grew by strong 17.6% yoy (9.8% qoq), led by price
                                                                                                             increases and favorable currency movement. As a result, exports revenue jumped
                                                                                                             by 51.1% yoy (down 1.3% qoq). Domestic performance, however, was muted as
                                                                                                             volume and realization posted moderate growth of 6.8% (down 6.2% qoq) and
                                                                                                             1.2% yoy, respectively, leading to domestic revenue growth of 8.1% yoy (down
                                                                                                             5.5% mom).

                                                                                                             During 3QFY2012, total motorcycle sales grew by 12.9% yoy (down 7.8% qoq)
                                                                                                             and three-wheelers sales jumped by 18.8% yoy (down 5.9% qoq). Other operating
                                                                                                             income posted better-than-expected 49.9% yoy growth to `223cr, aiding the
                                                                                                             overall top-line performance.

Exhibit 3: Volume growth driven by exports                                                                                                           Exhibit 4: Net average realization up 5.8% yoy
  (units)                                           Total volumes                              yoy change (%)                                 (%)     (`)                               Net average realisation                                 yoy change (%)                           (%)
1,400,000                         83.8                                                                                                        90.0   46,000                                                     8.7                                                                      10.0
                                                                                                                                                                                                                                                                              5.8
                                                  69.5                                                                                        80.0   45,000                                                                                                                              8.0
1,200,000                                                                                                                                                                                                                     5.6
                     63.9                                                                                                                            44,000                                                                                                   3.7
                                                                                                                                              70.0                                                                                              4.3                                      6.0
1,000,000                                                                                                                                            43,000
                                                                                                                                              60.0                                                   2.7
                                                                  45.7                                                                               42,000                                                                                                                              4.0
 800,000                                                                                                                                      50.0                            0.2
                                                                                                                                                     41,000                                                                                                                              2.0
 600,000                                                                                                                                      40.0
                                                                                                                                                     40,000                                                                                                                              0.0
                                                                                                                                              30.0              (3.6)                      (2.4)
 400,000                                                                   17.0     17.2       17.7          16.3                                    39,000
                                                                                                                                13.6          20.0                                                                                                                                       (2.0)
                                                                                                                                                     38,000
 200,000                                                                                                                                      10.0                                                                                                                                       (4.0)
                                                                                                                                                     37,000
        0                                                                                                                                     0.0    36,000                                                                                                                              (6.0)
                     3QFY10


                                       4QFY10


                                                    1QFY11


                                                                  2QFY11


                                                                           3QFY11


                                                                                    4QFY11


                                                                                               1QFY12


                                                                                                              2QFY12


                                                                                                                                3QFY12




                                                                                                                                                                  3QFY10


                                                                                                                                                                               4QFY10


                                                                                                                                                                                            1QFY11


                                                                                                                                                                                                     2QFY11


                                                                                                                                                                                                                3QFY11


                                                                                                                                                                                                                              4QFY11


                                                                                                                                                                                                                                                1QFY12


                                                                                                                                                                                                                                                                  2QFY12


                                                                                                                                                                                                                                                                               3QFY12
Source: Company, Angel Research                                                                                                                      Source: Company, Angel Research



Exhibit 5: Revenue mix                                                                                                                               Exhibit 6: Domestic market share trend
 (%)                                                         Domestic               Export                                                             (%)                 Three-wheelers                Motorcycles                                Total Two-wheelers
100.0                                                                                                                                                         40.9                                   42.1
                                                                                                                                                     45.0                                                            38.6                                                  39.9         38.9
 90.0                                                                                                                                                                       37.5                             38.5                                        38.3
                                                                                                                                                     40.0                                  36.4
 80.0
                                                                                                                                                     35.0                                            28.6
 70.0                                                                                                                                                         26.8          27.5           27.0                                                                            26.7
                                                                                                                                                     30.0                                                         25.6             26.1                  25.3                           25.1
 60.0
 50.0                                                                                                                                                25.0
 40.0                                                                                                                                                20.0
                                                                                                                                                              21.1          21.2           20.8      21.9
 30.0                                                                                                                                                15.0                                                         19.6             19.8                  19.5              20.1         18.9
 20.0                                                                                                                                                10.0
 10.0                                                                                                                                                 5.0
  0.0                                                                                                                                                 0.0
            3QFY10


                              4QFY10


                                                1QFY11


                                                                2QFY11


                                                                           3QFY11


                                                                                      4QFY11


                                                                                                    1QFY12


                                                                                                                       2QFY12


                                                                                                                                         3QFY12




                                                                                                                                                              3QFY10


                                                                                                                                                                             4QFY10


                                                                                                                                                                                            1QFY11


                                                                                                                                                                                                       2QFY11


                                                                                                                                                                                                                     3QFY11


                                                                                                                                                                                                                                       4QFY11


                                                                                                                                                                                                                                                         1QFY12


                                                                                                                                                                                                                                                                           2QFY12


                                                                                                                                                                                                                                                                                        3QFY12




Source: Company, Angel Research                                                                                                                      Source: Company, Angel Research


                                                                                                             EBITDA margin inches up to 21%: BJAUT’s EBITDA margin at 21% (up 63bp yoy
                                                                                                             and 89bp qoq) surprised positively and benefitted from softening of
                                                                                                             raw-material prices and higher contribution from exports. Favorable currency
                                                                                                             movement (sharp depreciation in INR vs. USD) also boosted exports realization
                                                                                                             and, thereby, overall operating margins. Raw-material expenses declined by
                                                                                                             100bp yoy as well as on a qoq basis, accounting for 70.4% of sales.
                                                                                                             Consequently, operating profit witnessed 25% yoy growth to `1,061cr.


January 19, 2012                                                                                                                                                                                                                                                                                 3
                                                                                                                              Bajaj Auto | 3QFY2012 Result Update



Exhibit 7: EBITDA margin surprises positively                                                  Exhibit 8: MTM loss restricts net profit growth
 (%)                   EBITDA margin                   Raw material cost/sales                  (` cr)                     Net profit (LHS)             Net profit margin (RHS)             (%)
 80.0                                                                                           900                                            16.0     16.1                                16.5
                                                                                                800                                   15.7                                         15.7     16.0
 70.0                                                                                                             15.6
                           74.1      73.5     74.0        73.5      75.6     74.5     73.6
 60.0   71.3      71.6                                                                          700                         15.2                                                            15.5
                                                                                                600                                                              14.9
 50.0                                                                                                                                                                                       15.0
                                                                                                500      14.4
 40.0                                                                                                                                                                                       14.5
                                                                                                400                                                                       13.8
 30.0   22.0      22.9               20.7     20.3        20.5               20.1     21.0                                                                                                  14.0
                           20.0                                     19.1                        300
 20.0                                                                                           200                                                                                         13.5
 10.0                                                                                           100                                                                                         13.0
  0.0                                                                                              0                                                                                        12.5




                                                                                                         3QFY10


                                                                                                                  4QFY10


                                                                                                                             1QFY11


                                                                                                                                      2QFY11


                                                                                                                                               3QFY11


                                                                                                                                                        4QFY11


                                                                                                                                                                 1QFY12


                                                                                                                                                                          2QFY12


                                                                                                                                                                                   3QFY12
         3QFY10


                  4QFY10


                            1QFY11


                                     2QFY11


                                              3QFY11


                                                           4QFY11


                                                                    1QFY12


                                                                             2QFY12


                                                                                      3QFY12
Source: Company, Angel Research                                                                Source: Company, Angel Research


                                                                        Net profit growth restricted due to MTM loss: Led by strong operating performance
                                                                        and lower tax rate, net profit registered strong 19.2% yoy (9.6% qoq) growth to
                                                                        `795cr. However, bottom-line growth during the quarter was restricted due to the
                                                                        depreciation of INR against the USD as a result of which the company reported
                                                                        MTM loss of `59cr. Tax rate was lower at 25.1% in 3QFY2012 against 27.3% in
                                                                        3QFY2011 on account of higher production from the Pantnagar facility.


                                                                        Conference call – Key highlights

                                                                             According to management, domestic demand for motorcycles is likely to
                                                                             remain sluggish for the next couple of quarters and is expected to grow in low
                                                                             single digits.

                                                                             Average USD/INR rate at which the exports revenue was realized during
                                                                             3QFY2012 was 49.4 as against 47.8 in 2QFY2012.

                                                                             On the exports front, BJAUT is fully hedged for 4QFY2012 and has hedged
                                                                             70% of its estimated exports for FY2013 at a rate in excess of `47/USD.

                                                                             BJAUT hiked its product prices by 3.5% across models and segments in the
                                                                             exports market, effective October 2011, to offset the impact of reduced
                                                                             exports incentive under the Duty Drawback Scheme (DDS).

                                                                             BJAUT’s overall market share in the motorcycle segment stood at 31% and
                                                                             domestic market share stood at 25.1% in 3QFY2012.

                                                                             Around 20-22% of the company’s total two-wheeler sales are currently
                                                                             financed.

                                                                             Management expects commodity prices to remain at 3QFY2012 levels in the
                                                                             coming quarter. While commodity prices have softened, the benefits have
                                                                             been negated due to INR depreciation.

                                                                             Around ~`550cr of VAT refund to the company has been blocked by the
                                                                             Maharashtra state government as of 3QFY2012.




January 19, 2012                                                                                                                                                                               4
                                                          Bajaj Auto | 3QFY2012 Result Update



                   Investment arguments
                       Strong focus on Discover and Pulsar to improve market share: BJAUT has
                       witnessed slight moderation in demand in the domestic market recently due to
                       increased competitive activity and slowdown in industry demand. However,
                       BJAUT continues to focus on its core brands Discover and Pulsar. The
                       successful launches of Discover 100cc and 125cc bikes have helped BJAUT to
                       maintain its market share at 25-27% in the domestic motorcycle market.
                       Further, launch of the new Pulsar is expected to help BJAUT in retaining its
                       strong volume momentum. The company is positioning itself in-line with its
                       strategy of value and price products, wherein it proposes to tap the
                       higher-value bike segments, which have a high-growth potential and fetch
                       better realizations.

                       Three-wheelers registering healthy growth: BJAUT has a strong presence in the
                       three-wheeler market, with an overall market share (including exports) of
                       ~60%. The company tops the passenger auto-rickshaw segment (~66%
                       market share), which accounts for ~85% of the three-wheeler market. The
                       three-wheeler segment fetches higher margins than the company’s
                       two-wheeler business. Although competition in the domestic three-wheeler
                       space is intense, strong export volume growth has helped BJAUT to post
                       higher volumes. As a result, we expect the company’s three-wheeler volumes
                       to grow by 17.3% over FY2011-13E.

                       High growth potential in exports volume: BJAUT registered a strong exports
                       CAGR of ~35% during FY2006-11, aided by a ~40% CAGR in two-wheeler
                       exports and a ~25% CAGR in three-wheeler exports. Going ahead, we
                       estimate BJAUT to register a 25% CAGR over FY2011-13E, driven by a strong
                       demand outlook from the exports market. BJAUT has hedged 90-95% of its
                       FY2012 exports at a USD-INR rate of `47-51. The recent sharp depreciation
                       of the INR against the USD is expected to further aid exports profitability.


                   Outlook and valuation

                   We continue to prefer BJAUT over Hero MotoCorp in the two-wheeler space,
                   owing to its diversified business model, healthy revenue and earnings visibility and
                   attractive valuations. We broadly retain our volume and earnings estimates for
                   FY2012/13. At `1,467, the stock is trading at 14x FY2012E and 12.5x FY2013E
                   earnings. Post the recent correction in the stock price, we recommend Buy on the
                   stock with a target price of `1,755.




January 19, 2012                                                                                     5
                                                                                          Bajaj Auto | 3QFY2012 Result Update



Exhibit 9: Key assumptions
Y/E March                           FY2009                  FY2010                   FY2011               FY2012E              FY2013E
Total volume (units)              2,194,111              2,851,518                 3,823,954         4,372,090                4,909,591
Domestic                          1,276,427              1,781,748                 2,414,606             2,595,701            2,803,358
Export                             631,383                 725,097                  972,437              1,254,444            1,505,332
Total motorcycle                  1,907,810              2,506,845                 3,387,043             3,850,145            4,308,690
Scooters                            11,772                    3,737                      27                      -                    -
Total two-wheelers                1,919,582              2,510,582                 3,387,070         3,850,145                4,308,690
Passenger domestic                 125,276                 164,493                  201,246               205,271              221,693
Goods domestic                      10,197                   11,534                   4,357                 4,444                4,533
Exports                            139,056                 164,909                  231,281               312,229              374,675
Total three-wheelers               274,529                 340,936                  436,884               521,944              600,901
Total change (%)
Total volume                         (10.5)                     30.0                    34.1                  14.3                 12.3
Domestic                             (23.0)                     39.6                    35.5                   7.5                  8.0
Export                                 31.1                     14.8                    34.1                  29.0                 20.0
Total motorcycle                     (10.8)                     31.4                    35.1                  13.7                 11.9
Scooters                             (44.8)                   (68.3)                        -                    -                    -
Total two-wheelers                   (11.2)                     30.8                    34.9                  13.7                 11.9
Passenger domestic                     (1.7)                    31.3                    22.3                   2.0                  8.0
Goods domestic                       (61.7)                     13.1                  (62.2)                   2.0                  2.0
Exports                                 2.0                     18.6                    40.2                  35.0                 20.0
Total three-wheelers                   (5.4)                    24.2                    28.1                  19.5                 15.1
Source: Company, Angel Research



                                               Exhibit 10: Angel vs. consensus forecast
                                                                          Angel estimates          Consensus          Variation (%)
                                                                          FY12E        FY13E    FY12E        FY13E   FY12E        FY13E
                                               Total op. income (` cr)   20,002       22,830    19,935      22,914     0.3         (0.4)
                                               EPS (`)                    104.5        117.0     106.8       119.6    (2.1)        (2.2)
                                               Source: Bloomberg, Angel Research




January 19, 2012                                                                                                                      6
                                                                                                                                                                                                                                           Bajaj Auto | 3QFY2012 Result Update



Exhibit 11: One-year forward P/E band                                                                                                                                            Exhibit 12: One-year forward P/E chart
 (`)                    Share Price (`)                                           6x                         10x                       14x                      18x               (x)                                               Absolute P/E                               Five-yr average P/E
2,500                                                                                                                                                                             60

2,000                                                                                                                                                                             50

                                                                                                                                                                                  40
1,500
                                                                                                                                                                                  30
1,000
                                                                                                                                                                                  20
  500
                                                                                                                                                                                  10

       0                                                                                                                                                                           0
                                                                                           Dec-07




                                                                                                                                                                                                       Dec-04
                                     Jun-05




                                                                                                                                                                                                                                                                      Jun-08
                                                                                                                                                                       Jan-12




                                                                                                                                                                                                                                                   Jan-07




                                                                                                                                                                                                                                                                                                                                                     Jan-12
                        Aug-04




                                                                                                                                                                                                                         Aug-05




                                                                                                                                                                                                                                                                                                                     Aug-10
                                                                                                                                                       Mar-11




                                                                                                                                                                                        Apr-04




                                                                                                                                                                                                                                                                                     Mar-09




                                                                                                                                                                                                                                                                                                                                       Apr-11
                                                       Apr-06
            Oct-03




                                                                                                                                                                                                                                                             Oct-07




                                                                                                                                                                                                                                                                                                   Nov-09
                                                                         Feb-07




                                                                                                              Sep-08


                                                                                                                           Jul-09


                                                                                                                                        May-10




                                                                                                                                                                                                                                       May-06
Source: Company, Bloomberg, Angel Research                                                                                                                                       Source: Company, Bloomberg, Angel Research



Exhibit 13: BJAUT – Premium/Discount to Sensex P/E                                                                                                                               Exhibit 14: Two-wheeler stock performance v/s Sensex
 (%)                                  Absolute premium                                                             Five-yr average P/E                                                                                     TVSL                          HMCL                    BJAUT                                Sensex
 250                                                                                                                                                                              500
                                                                                                                                                                                  450
 200
                                                                                                                                                                                  400
 150                                                                                                                                                                              350
                                                                                                                                                                                  300
 100
                                                                                                                                                                                  250
  50                                                                                                                                                                              200
   0                                                                                                                                                                              150
                                                                                                                                                                                  100
 (50)
                                                                                                                                                                                   50
(100)                                                                                                                                                                               0
                                                                                                                                                                                                                                                Jun-09
                                                                                                                                                                                                                                  Jan-09




                                                                                                                                                                                                                                                                                                                                                 Jan-12
                                                                                                                                                                                                                Aug-08




                                                                                                                                                                                                                                                                                                                              Aug-11
                                                                                                                                                                                             Mar-08




                                                                                                                                                                                                                                                                       Apr-10




                                                                                                                                                                                                                                                                                                            Mar-11
                                                                                                                                                                                                                                                             Nov-09




                                                                                                                                                                                                                                                                                         Sep-10
                     Dec-04




                                                                                                    Jun-08
                                                                Jan-07




                                                                                                                                                                      Jan-12
                                 Aug-05




                                                                                                                                            Aug-10
           Apr-04




                                                                                                                  Mar-09




                                                                                                                                                       Apr-11
                                                                                  Oct-07




                                                                                                                              Nov-09
                                              May-06




Source: Company, Bloomberg, Angel Research                                                                                                                                       Source: Company, Bloomberg, Angel Research



Exhibit 15: Automobile - Recommendation summary
                                                                                                    CMP Tgt. price                                   Upside                       P/E (x)                                         EV/EBITDA (x)                          RoE (%)                                     FY11-13E EPS
Company                                   Reco.
                                                                                                     (`)        (`)                                     (%)                     FY12E            FY13E                        FY12E                      FY13E        FY12E                   FY13E                           CAGR (%)
Ashok Leyland                             Accumulate                                                         27                        29                 9.6                    12.9                 10.9                           6.9                    6.2         13.7                      15.1                                           1.9
Bajaj Auto                                Buy                                                 1,467                        1,755                      19.6                       14.0                 12.5                           8.9                    7.7         54.7                      47.8                                          11.0
Hero MotoCorp                             Neutral                                             1,901                                     -                        -               16.1                 14.2                           9.3                    7.7         64.4                      50.8                                          20.4
Maruti Suzuki                             Accumulate                                          1,129                        1,185                          5.2                    23.2                 14.3                        14.2                      8.1                9.5                13.5                                           0.6
Mahindra &
                                          Buy                                                         675                           829               22.9                       14.1                 12.4                           8.8                    7.2         25.7                      25.2                                          12.4
Mahindra
Tata Motors                               Neutral                                                     219                               -                        -                8.1                  7.4                           5.2                    4.7         39.4                      33.9                                           1.6
TVS Motor                                 Buy                                                                50                        66             31.6                        9.2                  8.4                           4.6                    3.9         24.1                      22.5                                          17.4
Source: Company, Bloomberg, Angel Research




January 19, 2012                                                                                                                                                                                                                                                                                                                                          7
                                                      Bajaj Auto | 3QFY2012 Result Update



                   Profit & Loss Statement
                   Y/E March (` cr)               FY08     FY09     FY10    FY11    FY12E    FY13E
                   Gross sales                    9,690    9,050 12,118 16,932 20,269 23,443
                   Less: Excise duty              1,030     613      610     933    1,115    1,289
                   Net Sales                      8,660    8,437 11,509 15,998 19,154 22,154
                   Other operating income          359      373      412     611     848      677
                   Total operating income         9,019    8,810 11,921 16,609 20,002 22,830
                   % chg                           (5.5)    (2.3)    35.3    39.3    20.4     14.1
                   Total Expenditure              7,855    7,829    9,515 13,329 15,955 18,412
                   Net Raw Materials              6,618    6,463    8,070 11,799 14,174 16,327
                   Other Mfg costs                 216      192      214     251     306      354
                   Personnel                       442      538      583     477     575      687
                   Other                           579      635      648     802     900     1,043
                   EBITDA                         1,164     982     2,406   3,280   4,047    4,418
                   % chg                          (16.8)   (15.7)   145.0    36.3    23.4      9.2
                   (% of Net Sales)                12.9     11.1     20.2    19.7    20.2     19.4
                   Depreciation & Amortization     174      130      136     123     136      149
                   EBIT                            990      852     2,269   3,157   3,911    4,269
                   % chg                          (18.1)   (14.0)   166.3    39.1    23.9      9.2
                   (% of Net Sales)                11.4     10.1     19.7    19.7    20.4     19.3
                   Interest & other Charges           5       21       6       2       21       2
                   Other Income                    149      122      144    1,193    321      357
                    (% of PBT)                     13.8     14.6      5.8    31.7     7.3      7.7
                   PBT                            1,134     953     2,408   4,348   4,210    4,624
                   % chg                          (34.4)   (15.9)   152.6    80.6    (3.2)     9.8
                   Extraordinary Expense/(Inc.)     (53)   (115)     (82)    590     154         -
                   Tax                             378      299      705    1,008   1,032    1,239
                   (% of PBT)                      35.0     35.6     28.3    26.8    23.6     26.8
                   PAT (reported)                  756      655     1,703   3,340   3,179    3,385
                   ADJ. PAT                        809      769     1,784   2,750   3,025    3,385
                   % chg                          (25.6)    (4.9)   132.0    54.1    10.0     11.9
                   (% of Net Sales)                 9.3      9.1     15.5    17.2    15.8     15.3
                   Basic EPS (`)                   27.9     26.6     58.8   115.4   109.9    117.0
                   Adjusted EPS (`)                27.9     26.6     61.7    95.0   104.5    117.0
                   % chg                          (48.0)    (4.9)   132.0    54.1    10.0     11.9




January 19, 2012                                                                                 8
                                                               Bajaj Auto | 3QFY2012 Result Update



                   Balance Sheet
                   Y/E March (` cr)                       FY08         FY09    FY10     FY11    FY12E   FY13E
                   SOURCES OF FUNDS
                   Equity Share Capital                    145          145     145      289     289     289
                   Reserves & Surplus                    1,443         1,725   2,784    4,621   5,866   7,728
                   Shareholders’ Funds                   1,588         1,870   2,928    4,910   6,155   8,017
                   Total Loans                           1,334         1,570   1,339     325     175     175
                   Deferred Tax Liability                    11           4         2     30      30      30
                   Total Liabilities                     2,933         3,444   4,269    5,265   6,360   8,223
                   APPLICATION OF FUNDS
                   Gross Block                           2,984         3,350   3,379    3,395   3,688   3,921
                   Less: Acc. Depreciation               1,726         1,808   1,900    1,912   2,049   2,198
                   Net Block                             1,258         1,542   1,480    1,483   1,639   1,723
                   Capital Work-in-Progress                  35          22        42     70      37      39
                   Goodwill                                    -           -        -       -       -       -
                   Investments                           1,857         1,809   4,022    4,795   5,724   7,400
                   Current Assets                        1,650         2,325   1,584    2,873   5,205   6,212
                      Cash                                   56         137     101      556     769    1,082
                      Loans & Advances                     969         1,491    797     1,406   3,256   3,766
                      Other                                625          697     686      910    1,180   1,364
                   Current liabilities                   1,877         2,438   2,858    3,955   6,246   7,151
                   Net Current Assets                     (228)        (112) (1,274) (1,083) (1,040)    (939)
                   Mis. Exp. not written off                 11         183         -       -       -       -
                   Total Assets                          2,933         3,444   4,269    5,265   6,360   8,223
                   Note: Cash and bank balance includes term deposits with banks


                   Cash Flow Statement
                   Y/E March (` cr)                        FY08        FY09    FY10     FY11    FY12E   FY13E
                   Profit before tax                       1,081        838    2,489    3,758   4,364   4,624
                   Depreciation                              174        130     136      123     136     149
                   Change in Working Capital               (204)        145     833      198    (133)    222
                   Less: Other income                        193        402        17   1,057    685     389
                   Direct taxes paid                         378        299     705     1,008   1,032   1,239
                   Cash Flow from Operations                 480        413    2,737    2,014   2,651   3,367
                   (Inc.)/Dec. in Fixed Assets               187       (353)    (49)     (44)   (260)   (235)
                   (Inc.)/Dec. in Investments                      -     49 (2,213)     (774)   (929) (1,675)
                   (Inc.)/Dec. in loans and advances         (95)      (141)    (43)    (626)    213     (94)
                   Other income                              149        122     144     1,193    321     357
                   Cash Flow from Investing                  240       (324) (2,161)    (252)   (656) (1,648)
                   Issue of Equity                            44           -        -    145        -       -
                   Inc./(Dec.) in loans                    (291)        236    (231) (1,013)    (150)       -
                   Dividend Paid (Incl. Tax)                 474        339     372     1,345   1,439   1,524
                   Others                                  (973)       (582)   (753) (2,183) (3,072) (2,929)
                   Cash Flow from Financing                (748)         (8)   (612) (1,707) (1,783) (1,406)
                   Inc./(Dec.) in Cash                       (27)        81     (35)      55     213     313
                   Opening Cash balances                      83         56     137      101     556     769
                   Closing Cash balances                      56        137     101      156     769    1,082




January 19, 2012                                                                                            9
                                                       Bajaj Auto | 3QFY2012 Result Update



                   Key Ratios
                    Y/E March                  FY08    FY09    FY10     FY11     FY12E    FY13E
                    Valuation Ratio (x)
                    P/E (on FDEPS)             52.5    55.2     24.9     15.4     14.0     12.5
                    P/CEPS                     45.7    54.1     23.1     12.3     12.8     12.0
                    P/BV                       26.7    22.7     14.5      8.6      6.9      5.3
                    Dividend yield (%)          0.7     0.7      1.4      2.7      2.9      3.1
                    EV/Sales                    4.3     4.6      3.3      2.2      1.8      1.5
                    EV/EBITDA                  36.0    42.9     16.5     11.4      8.9      7.7
                    EV / Total Assets          14.3    12.2      9.3      7.1      5.7      4.2
                    Per Share Data (`)
                    EPS (Basic)                27.9    26.6     58.8    115.4    109.9    117.0
                    EPS (Fully diluted)        27.9    26.6     61.7     95.0    104.5    117.0
                    Cash EPS                   32.1    27.1     63.6    119.7    114.6    122.1
                    DPS                        10.0    11.0     20.0     40.0     42.5     45.0
                    Book Value                 54.9    64.6    101.2    169.7    212.7    277.0
                    Dupont Analysis
                    EBIT margin                11.4    10.1     19.7     19.7     20.4     19.3
                    Tax retention ratio         0.7     0.6      0.7      0.7      0.8      0.7
                    Asset turnover (x)          1.8     2.8      3.2      3.7      3.9      3.6
                    ROIC (Post-tax)            13.4    18.5     45.1     54.0     60.6     50.6
                    Cost of Debt (Post Tax)        -       -        -        -        -        -
                    Leverage (x)                   -       -        -        -        -        -
                    Operating ROE              13.4    18.5     45.1     54.0     60.6     50.6
                    Returns (%)
                    ROCE (Pre-tax)             19.5    26.7     58.8     66.2     67.3     58.6
                    Angel ROIC (Pre-tax)       34.4    25.8     54.5     67.0     69.9     59.8
                    ROE                        22.7    44.5     74.4     70.2     54.7     47.8
                    Turnover ratios (x)
                    Asset Turnover              2.9     2.8      3.5      4.9      5.6      6.0
                    Inventory / Sales (days)     14      15       12       11       12       12
                    Receivables (days)           17      14        9        7        9        9
                    Payables (days)              54      49       51       51       48       47
                    WC (ex-cash) (days)        (18)    (11)     (25)     (33)     (31)     (31)
                    Solvency ratios (x)
                    Net debt to equity         (0.4)   (0.2)    (1.0)    (1.0)    (1.0)    (1.0)
                    Net debt to EBITDA         (0.5)   (0.4)    (1.2)    (1.5)    (1.6)    (1.9)
                    Interest Coverage          192       41     379     1,868     186     2,438




January 19, 2012                                                                              10
                                                                                              Bajaj Auto | 3QFY2012 Result Update



  Research Team Tel: 022 - 39357800                   E-mail: research@angelbroking.com                    Website: www.angelbroking.com

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  Disclosure of Interest Statement                                               Bajaj Auto
  1. Analyst ownership of the stock                                                   No
  2. Angel and its Group companies ownership of the stock                             No
  3. Angel and its Group companies' Directors ownership of the stock                  No
  4. Broking relationship with company covered                                        No

  Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors


  Ratings (Returns):              Buy (> 15%)                            Accumulate (5% to 15%)                     Neutral (-5 to 5%)
                                  Reduce (-5% to 15%)                    Sell (< -15%)


January 19, 2012                                                                                                                           11

				
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