2QFY2012 Result Update | Automobile

October 20, 2011

Bajaj Auto
Performance Highlights
Y/E March (` cr) Net sales EBITDA EBITDA margin (%) Reported PAT
Source: Company, Angel Research

ACCUMULATE
CMP Target Price
2QFY11 4,342 897 20.7 682 % chg (yoy) 21.3 17.9 (59)bp 6.4 Angel est. 5,135 996 19.4 776 % diff 2.6 6.2 68bp (6.4)

`1,616 `1,701
12 Months

2QFY12 5,267 1,057 20.1 726

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Automobile 46,759 0.7 1,695/1,190 53,959 10 16,937 5,092 BAJA.BO BJAUT@IN

Bajaj Autos (BAL) 2QFY2012 operating results were ahead of our estimates, led by superior product mix, higher contribution from exports and lower raw-material expenses. As a result, EBITDA margin touched 20% again, registering 100bp qoq expansion. However, due to a notional forex loss of `95cr, reported net profit came in below expectations. We broadly maintain our volume, revenue and EPS estimates for FY2012/13. We maintain our Accumulate rating on the stock. Strong operating performance led by EBITDA margin expansion: BAL reported strong 21.3% yoy (10.3% qoq) growth in its top line to `5,267cr, led by a 16.3% yoy (6.5% qoq) jump in volumes and a 3.7% yoy (3.3% qoq) increase in net average realization. Volume performance was driven by robust 37.9% yoy (flat qoq) growth in exports volume, leading to an impressive 50.3% yoy (2.7% qoq) jump in exports revenue. Domestic volume growth was slightly muted and stood at 6.8% yoy (11.3% qoq). Net average realization improved mainly on account of better product mix and price increases. The companys EBITDA margin at 20.1% (up 100bp qoq) surprised positively, led by qoq and yoy improvement in raw-material expenses, which declined by 97bp yoy (110bp qoq), accounting for 70.6% of sales. During the quarter, mark-to-market (MTM) loss of `95cr relating to hedging contracts was charged to the P&L, as a result net profit grew by 6.4% yoy (2.1% qoq) to `726cr. Outlook and valuation: We continue to prefer BAL over Hero MotoCorp in the two-wheeler space owing to its diversified business model, healthy revenue and earnings visibility and reasonable valuations. We broadly maintain our volume and earnings estimates for FY2012/13. At `1,616, the stock is trading at 15.5x FY2012E and 14.3x FY2013E earnings. We maintain our Accumulate view on the stock with a target price of `1,701, valuing it at 15x FY2013E earnings.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 50.0 17.2 16.4 16.4

Abs. (%) Sensex Bajaj Auto

3m 13.4

1yr

3yr 65.7

(8.5) (14.8)

8.8 506.4

Key financials
Y/E March (` cr) Net sales % chg Adj. profit % chg Adj. OPM (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2010 11,921 35.3 1,784 132.0 20.2 61.7 27.5 16.0 74.4 58.8 3.6 18.3

FY2011 16,609 39.3 2,750 54.1 19.7 95.0 17.0 9.5 70.2 66.2 2.5 12.7

FY2012E 19,665 18.4 3,009 9.4 19.2 104.0 15.5 7.6 54.5 62.7 2.0 10.7

FY2013E 22,887 16.4 3,281 9.0 18.7 113.4 14.3 5.9 46.7 57.1 1.6 9.1

Yaresh Kothari
022-39357800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

Bajaj Auto | 2QFY2012 Result Update

Exhibit 1: Quarterly financial performance

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Purchase of traded goods (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Extr. Items) Extr. Income/(Expense) PBT (incl. Extr. Items) (% of Sales) Provision for Taxation (% of PBT) Reported PAT PATM Equity capital (cr) EPS (`)
Source: Company, Angel Research

2QFY12 5,267 3,562 67.6 131 2.5 199 3.8 317 6.0 4,210 1,057 20.1 20 39 74 1,072 95 977 18.5 251 25.7 726 13.8 289.4 25.1

2QFY11 4,342 2,911 67.0 114 2.6 160 3.7 259 6.0 3,445 897 20.7 1 30 84 950 950 21.9 268 28.2 682 15.7 289.4 23.6

yoy chg (%) 21.3 22.4 14.8 24.3 22.3 22.2 17.9 3,011 31.6 (11.0) 12.8 2.8 (6.4) 6.4

1QFY12 4,777 3,290 68.9 139 2.9 176 3.7 261 5.5 3,866 911 19.1 0 31 73 953 953 19.9 242 25.4 711 14.9 289.4

qoq chg (%) 10.3 8.3 (5.6) 13.1 21.5 8.9 16.1 8,691 28.7 1.9 12.5 2.5 3.7 2.1

1HFY12 10,045 6,852 68.2 270 2.7 376 3.7 578 5.8 8,076 1,968 19.6 20 70 148 2,025 95 1,930 19.2 493 25.5 1,437 14.3 289.4

1HFY11 8,232 5,554 67.5 241 2.9 286 3.5 478 5.8 6,558 1,674 20.3 1 62 165 1,777 1,777 21.6 504 28.4 1,273 15.5 289.4 44.0

chg (%) 22.0 23.4 12.2 31.6 21.0 23.2 17.6 3,046 13.4 (10.8) 14.0 8.6 (2.2) 12.9

6.4

24.6

2.1

49.7

12.9

Exhibit 2: Quarterly volume performance

(units) Domestic Exports Total volumes Motorcycles Domestic Exports Total motorcycles % of total volumes Three-wheelers Domestic Exports Total three-wheelers % of total volumes
Source: Company, Angel Research

2QFY12 740,353 423,784 1,164,137 685,021 342,336 1,027,357 88.3 55,332 81,448 136,780 11.7

2QFY11 693,216 307,332 1,000,548 632,650 250,822 883,472 88.3 60,566 56,510 117,076 11.7

yoy chg (%) 6.8 37.9 16.3 8.3 36.5 16.3

1QFY12 665,101 427,714 1,092,815 622,825 340,226 963,051 88.1

qoq chg (%) 11.3 (0.9) 6.5 10.0 0.6 6.7

1HFY12 1,405,454 851,498 2,256,952 1,307,846 682,562 1,990,408 88.2

1HFY11 1,297,626 631,231 1,928,857 1,198,771 513,092 1,711,863 88.8 98,855 118,139 216,994 11.2

% chg 8.3 34.9 17.0 9.1 33.0 16.3

(8.6) 44.1 16.8

42,276 87,488 129,764 11.9

30.9 (6.9) 5.4

97,608 168,936 266,544 11.8

(1.3) 43.0 22.8

October 20, 2011

Bajaj Auto | 2QFY2012 Result Update

Net sales register strong growth of 21.3% yoy: BAL reported slightly better-than-expected revenue growth of 21.3% yoy (10.3% qoq) to `5,267cr,

driven by a 16.3% yoy (6.5% qoq) jump in volumes and a 3.7% yoy (3.3% qoq) increase in net average realization. Volume performance was led by robust growth on the exports front, with volumes growing by 37.9% yoy (flat qoq). As a result, exports revenue recorded impressive growth of 50.3% yoy (2.7% qoq). Domestic volume growth, however, was slightly muted and stood at 6.8% yoy (up 11.3% qoq). Total motorcycle sales grew by 16.3% yoy.
Three-wheelers registered 16.8% yoy sales growth. During 2QFY2012, Pulsar sales averaged ~86,000 units monthly and Discover registered ~133,000 units of monthly sales. Other operating income also posted 37.2% yoy growth to `221cr, aiding the overall top-line performance.

Exhibit 3: Volume growth driven by exports

(units) 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0
7.3 63.9 69.5

Exhibit 4: Net average realization improves 3.7% yoy

(%) 90 80 70 60 50 40 30 20 16.3 10 0 (`) 44,000 43,000 42,000 41,000 40,000 39,000 38,000 37,000
(3.6) (2.4) 0.2 2.7 6.2

Total volumes
83.8

yoy change (%)

Net average realisation

8.7

yoy change (%)

(%) 10 8

5.6 4.3

6
3.7 4

45.7 17.0 17.2 17.7

2 0 (2) (4) (6)

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12 4QFY11

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

2QFY12

Source: Company, Angel Research

Exhibit 5: Net sales grew by 21.3% yoy

(` cr) 6,000 5,000 4,000 3,000 2,000 1,000 0
13.3 56.7

Exhibit 6: Revenue mix

(%) 90 80 70 60 50 40 30 21.3 20 10 0 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Domestic Export

Net sales (LHS)

80.5 66.4

Net sales growth (RHS)

50.4 26.7 23.5 22.8

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

1QFY12

2QFY12 2QFY12

Source: Company, Angel Research

Source: Company, Angel Research

EBITDA margin touches the 20% mark again: BALs EBITDA margin at 20.1%

(up 100bp qoq) surprised positively, led by qoq and yoy improvement in raw-material costs. Superior product mix, positive operating leverage and higher contribution from exports markets also benefitted the operating margin performance. Raw-material expenses declined 97bp yoy (110bp qoq), accounting for 70.6% of sales. Thus, operating profit during the quarter witnessed a 17.9% yoy (16.1% qoq) growth to `1,057cr.

October 20, 2011

Bajaj Auto | 2QFY2012 Result Update

Exhibit 7: EBITDA margin touches 20% again

(%) 80 70 60 50 40 30 20 10 0 68.5 EBITDA margin 71.3 71.6 74.1 73.5 Raw material cost/sales 75.6 74.0 73.5 74.5

Exhibit 8: Net profit impacted due to MTM loss

(` cr) 800 700 600 500 400 300 200 100 0
14.0 15.6 15.2 14.4 14.9

Net profit (LHS)

15.7

Net profit margin (RHS)

16.0 16.1

(%) 17 16 16 15 15 14
13.8 14

22.0

22.0

22.9

20.0

20.7

20.3

20.5

19.1

20.1

13 13

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, Angel Research

Source: Company, Angel Research

Net profit growth affected by MTM loss: BAL has entered into forward contracts to protect its exports realization. Due to the depreciation of INR against the USD, BAL reported an MTM loss of `95cr. As a result, net profit grew modestly by 6.4% yoy (2.1% qoq) to `726cr. Net profit was also restricted due lower-than-expected other income and a substantial increase in interest expense, which stood at `20cr in 2QFY2012 as against `0.65cr in 2QFY2011.

Key highlights
During 2QFY2012, BAL re-launched Boxer in the 150cc category, targeting especially the rural market. BAL is also planning to launch new KTM and Pulsar models in 4QFY2012. The company 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). The DEPB export incentive scheme has been replaced by DDS from October 1, 2011, and incentive rate has been reduced to 5.5% from 9%. Additionally, the government has announced a 1% special duty benefit on exports until March 31, 2012. In the domestic market, BAL has increased prices of Discover and Pulsar by `500 each. BAL received VAT refund of `860cr during the quarter. BALs overall market share in the motorcycle segment stood at 34% in 2QFY2012 and domestic market share stood at 26.7%. Currently, the company has a 39.9% market share in the domestic three-wheeler passenger segment. Further, it continues to dominate the petrol and alternate fuel passenger segment with a market share of ~89%.

October 20, 2011

2QFY12

Bajaj Auto | 2QFY2012 Result Update

Exhibit 9: Domestic market share trend

(%) 45 40 35 30 25 20 15 10 5 0 40.6 Three-wheelers 40.9 37.5 27.5 Motorcycles 42.1 36.4 27.0 28.6 Total Two-wheelers 38.5 25.6 38.6 26.1 38.3 25.3 39.9 26.7

22.6

26.8

17.7

21.1

21.2

20.8

21.9

19.4

19.9

19.5

20.1

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

Source: Company, SIAM, Angel Research

October 20, 2011

2QFY12

Bajaj Auto | 2QFY2012 Result Update

Investment arguments
Strong focus on Discover and Pulsar to improve market share: BAL continues to witness strong demand in the two-wheeler segment from its strong dual offering of Discover and Pulsar. The successful launches of Discover 100cc and 125cc bikes have helped BAL to maintain its market share of ~27% in the domestic motorcycle market. Further, launch of the new Pulsar is expected to help BAL 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: BAL 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 (66.8% market share), which accounts for ~85% of the three-wheeler market. The three-wheeler segment fetches higher margins than the companys two-wheeler business. Although competition in the domestic three-wheeler space is intense, strong export volume growth has helped BAL to post higher volumes. As a result, we expect the companys three-wheeler volumes to grow by 15-16% over FY2011-13E. High growth potential in exports volume: BAL 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 BAL to register a ~23% CAGR over FY2011-13E, driven by a strong demand outlook from the exports market. BAL has hedged 90-95% of its FY2012 exports at a USD-INR rate of `47. The recent sharp depreciation of the INR against the USD is expected to further aid exports profitability.

Outlook and valuation

We continue to prefer BAL over Hero MotoCorp in the two-wheeler space owing to its diversified business model, healthy revenue and earnings visibility and reasonable valuations. We broadly maintain our volume and earnings estimates for FY2012/13. At `1,616, the stock is trading at 15.5x FY2012E and 14.3x FY2013E earnings. We maintain our Accumulate view on the stock with a target price of `1,701, valuing it at 15x FY2013E earnings.

October 20, 2011

Bajaj Auto | 2QFY2012 Result Update

Exhibit 10: Key assumptions

Y/E March Total volume (units) Domestic Export Total motorcycle Scooters Total two-wheelers Passenger domestic Goods domestic Exports Total three-wheelers Total change (%) Total volume Domestic Export Total motorcycle Scooters Total two-wheelers Passenger domestic Goods domestic Exports Total three-wheelers
Source: Company, Angel Research

FY2009 2,194,111 1,276,427 631,383 1,907,810 11,772 1,919,582 125,276 10,197 139,056 274,529 (10.5) (23.0) 31.1 (10.8) (44.8) (11.2) (1.7) (61.7) 2.0 (5.4)

FY2010 2,851,518 1,781,748 725,097 2,506,845 3,737 2,510,582 164,493 11,534 164,909 340,936 30.0 39.6 14.8 31.4 (68.3) 30.8 31.3 13.1 18.6 24.2

FY2011 3,823,954 2,414,606 972,437 3,387,043 27 3,387,070 201,246 4,357 231,281 436,884 34.1 35.5 34.1 35.1 34.9 22.3 (62.2) 40.2 28.1

FY2012E 4,423,590 2,656,067 1,244,719 3,900,786 3,900,786 217,346 4,793 300,665 522,804 15.7 10.0 28.0 15.2 15.2 8.0 10.0 30.0 19.7

FY2013E 5,009,983 2,921,673 1,493,663 4,415,336 4,415,336 234,733 5,128 354,785 594,647 13.3 10.0 20.0 13.2 13.2 8.0 7.0 18.0 13.7

Exhibit 11: Angel vs. consensus forecast

Angel estimates FY12E Net sales (` cr) EPS (`) 19,102 104.0 FY13E 22,283 113.4 Consensus FY12E 19,514 103.0 FY13E 22,427 116.1 Variation (%) FY12E (2.1) 1.0 FY13E (0.6) (2.3)

Source: Bloomberg, Angel Research

October 20, 2011

Bajaj Auto | 2QFY2012 Result Update

Exhibit 12: One-year forward P/E band

(`) 2,500 2,000 1,500 1,000 500 0 Share Price (`) 6x 10x 14x 18x

Exhibit 13: One-year forward P/E chart

(x) 60 50 40 30 20 10 0 Absolute P/E Five-yr average P/E

Jul-08

Jul-06

May-05

May-09

Aug-04

Dec-06

Dec-10

Jan-05

Jan-08

Jul-09

Mar-06

Mar-10

Apr-04

Apr-07

Oct-03

Oct-07

Oct-11

Oct-05

Oct-08

Apr-10

Jan-11 May-11

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

Exhibit 14: BAL Premium/Discount to Sensex P/E

(%) 250 200 150 100 50 0 (50) (100) Absolute premium Five-yr average P/E

Exhibit 15: Two-wheeler stock performance v/s Sensex

500 450 400 350 300 250 200 150 100 50 0 TVS HH BAL Sensex

May-10

Dec-09

Sep-10

Jan-05

Jan-08

Apr-04

Apr-07

Apr-10

Jan-11

Jul-08

Mar-08

Aug-09

Apr-09

Oct-05

Oct-08

Oct-11

Jan-11

Source: Company, Bloomberg, Angel Research

Source: Company, Bloomberg, Angel Research

Exhibit 16: Automobile - Recommendation summary

Company Ashok Leyland Bajaj Auto Hero MotoCorp Maruti Suzuki M&M Tata Motors TVS Motor Reco. Buy Accumulate Neutral Accumulate Accumulate Neutral Neutral CMP Tgt. price (`) (`) 25 1,616 2,029 1,076 800 183 66 31 1,701 1,172 848 Upside (%) 26.2 5.2 8.9 6.0 P/E (x) FY12E 12.5 15.5 17.4 14.3 17.1 6.5 13.6 FY13E 9.5 14.3 15.6 11.9 15.0 6.0 12.1 EV/EBITDA (x) FY12E 6.8 10.7 10.4 8.4 11.1 4.6 6.6 FY13E 5.7 9.1 8.6 6.5 9.1 4.3 5.7 RoE (%) FY12E 12.8 54.5 63.7 14.3 25.0 44.6 19.2 FY13E 15.5 46.7 50.2 14.8 24.3 42.8 20.3 FY11-13E EPS CAGR (%) 4.6 9.2 18.8 7.5 11.1 3.7 11.8

Source: Company, Bloomberg, Angel Research

October 20, 2011

Nov-08

Oct-11

Jul-06

Jul-09

Oct-11

Bajaj Auto | 2QFY2012 Result Update

Profit & Loss Statement

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Other operating income Total operating income % chg Total Expenditure Net Raw Materials Other Mfg costs Personnel Other EBITDA % chg (% of Net Sales) Depreciation & Amortization EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) PBT % chg Extraordinary Expense/(Inc.) Tax (% of PBT) PAT (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Adjusted EPS (`) % chg FY08 9,690 1,030 8,660 359 9,019 (5.5) 7,855 6,618 216 442 579 1,164 (16.8) 12.9 174 990 (18.1) 11.4 5 149 13.8 1,134 (34.4) (53) 378 35.0 756 809 (25.6) 9.3 27.9 27.9 (48.0) FY09 613 373 (2.3) 7,829 6,463 192 538 635 982 (15.7) 11.1 130 852 (14.0) 10.1 21 122 14.6 953 (15.9) (115) 299 35.6 655 769 (4.9) 9.1 26.6 26.6 (4.9) FY10 610 412 35.3 FY11 933 611 39.3 FY12E 1,112 564 18.4 FY13E 1,297 604 16.4 9,050 12,118 16,932 20,213 23,580 8,437 11,509 15,998 19,102 22,283 8,810 11,921 16,609 19,665 22,887 9,515 13,329 15,893 18,617 8,070 11,799 14,193 16,534 214 583 648 2,406 145.0 20.2 136 2,269 166.3 19.7 6 144 5.8 2,408 152.6 (82) 705 28.3 1,703 1,784 132.0 15.5 58.8 61.7 132.0 251 477 802 3,280 36.3 19.7 123 3,157 39.1 19.7 2 1,193 31.7 4,348 80.6 590 1,008 26.8 3,340 2,750 54.1 17.2 115.4 95.0 54.1 267 573 860 3,773 15.0 19.2 135 3,638 15.2 19.0 1 457 11.2 4,094 (5.8) 1,085 26.5 3,009 3,009 9.4 15.8 104.0 104.0 9.4 357 691 1,036 4,269 13.2 18.7 142 4,127 13.4 18.5 1 399 8.8 4,525 10.5 1,244 27.5 3,281 3,281 9.0 14.7 113.4 113.4 9.0

October 20, 2011

Bajaj Auto | 2QFY2012 Result Update

Balance Sheet
Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Reserves & Surplus Shareholders Funds Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 2,984 1,726 1,258 35 1,857 1,650 56 969 625 1,877 (228) 11 2,933 3,350 1,808 1,542 22 1,809 2,325 137 1,491 697 2,438 183 3,444 3,379 1,900 1,480 42 4,022 1,584 101 797 686 2,858 4,269 3,395 1,912 1,483 70 4,795 2,873 556 1,406 910 3,955 5,265 3,745 2,047 1,698 37 5,710 5,241 816 3,247 1,178 6,343 6,345 4,066 2,190 1,877 41 7,292 6,090 928 3,788 1,373 7,196 8,103 145 1,443 1,588 1,334 11 2,933 145 1,725 1,870 1,570 4 3,444 145 2,784 2,928 1,339 2 4,269 289 4,621 4,910 325 30 5,265 289 5,851 6,140 175 30 6,345 289 7,608 7,897 175 30 8,103 FY08 FY09 FY10 FY11 FY12E FY13E

(112) (1,274) (1,083) (1,101) (1,106)

Note: Cash and bank balance includes term deposits with banks

Cash Flow Statement

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Less: Other income Direct taxes paid Cash Flow from Operations (Inc.)/Dec. in Fixed Assets (Inc.)/Dec. in Investments (Inc.)/Dec. in loans and advances Other income Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Others Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY08 1,081 174 (204) 193 378 480 187 (95) 149 240 44 (291) 474 (973) (748) (27) 83 56 FY09 838 130 145 402 299 413 (353) (141) 122 236 339 (582) (8) 81 56 137 FY10 2,489 136 833 17 705 2,737 (49) (43) 144 372 FY11 3,758 123 198 1,057 1,008 2,014 (44) (774) (626) 1,193 (252) 145 1,345 FY12E 4,094 135 (141) 298 1,085 2,705 (318) 329 457 (150) 1,439 FY13E 4,525 142 254 535 1,244 3,142 (324) (222) 399 1,524

49 (2,213)

(915) (1,582)

(324) (2,161)

(447) (1,728)

(231) (1,013)

(753) (2,183) (3,287) (2,826) (612) (1,707) (1,999) (1,303) (35) 137 101 55 101 156 260 556 816 112 816 928

October 20, 2011

10

Bajaj Auto | 2QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE (Pre-tax) Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) WC (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (0.4) (0.5) 192 (0.2) (0.4) 41 (1.0) (1.2) 379 (1.0) (1.5) 1,868 (1.0) (1.7) 4,154 (1.0) (1.9) 4,712 2.9 14 17 54 (18) 2.8 15 14 49 (11) 3.5 12 9 51 (25) 4.9 11 7 51 (33) 5.5 12 9 48 (33) 5.9 12 9 47 (32) 19.5 34.4 22.7 26.7 25.8 44.5 58.8 54.5 74.4 66.2 67.0 70.2 62.7 65.8 54.5 57.1 57.5 46.7 11.4 0.7 1.8 13.4 13.4 10.1 0.6 2.8 18.5 18.5 19.7 0.7 3.2 45.1 45.1 19.7 0.7 3.7 54.0 54.0 19.0 0.7 3.8 53.8 53.8 18.5 0.7 3.6 48.4 48.4 27.9 27.9 32.1 10.0 54.9 26.6 26.6 27.1 11.0 64.6 58.8 61.7 63.6 20.0 101.2 115.4 95.0 119.7 40.0 169.7 104.0 104.0 108.7 42.5 212.2 113.4 113.4 118.3 45.0 272.9 57.8 50.3 29.5 0.6 4.8 39.7 15.7 60.8 59.6 25.0 0.7 5.1 47.2 13.5 27.5 25.4 16.0 1.2 3.6 18.3 10.3 17.0 13.5 9.5 2.5 2.5 12.7 7.9 15.5 14.9 7.6 2.6 2.0 10.7 6.4 14.3 13.7 5.9 2.8 1.6 9.1 4.8 FY08 FY09 FY10 FY11 FY12E FY13E

October 20, 2011

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Bajaj Auto | 2QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Bajaj Auto No No No No

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

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

October 20, 2011

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