Bajaj Auto (BAAUTO) - ICICI Directcontent.icicidirect.com/mailimages/IDirect_BajajAuto_Q1FY20.pdf|...

ICIC

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Retail E

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Result

Update

July 29, 2019

CMP: | 2,490 Target: | 2,360 ( -5%) Target Period: 12 months

Bajaj Auto (BAAUTO)

REDUCE

Outperformance trend to recede; growth to taper…

Bajaj Auto (BAL) reported a steady Q1FY20 performance. Net revenues

came in at | 7,756 crore, up 4.5% YoY. Revenues grew higher than the 2%

YoY volume growth to 12.5 lakh units given higher blended ASP of

| 62,187/unit. The 2-W volumes were up 5% YoY to 10.8 lakh units while 3-

W volumes were down 16% YoY to 1.6 lakh units. Total exports were at 5.5

lakh units, up 2% YoY. EBITDA margins were at 15.4%, down 27 bps QoQ.

BAL realised a marginal softening in input costs during Q1FY20. However,

higher employee and other expenses as a percentage of sales dented

margin performance. Consequent reported PAT grew modestly by 0.9%

YoY to | 1,126 crore.

Performance of 2-W encouraging, 3-W weakness to continue

BAL has made impressive market share gains in the last few quarters

(domestic motorcycle market share of 18.3% as of June 2019 vs. 16.3%

YoY), and retains ambition of further improvement. By targeting the entry &

premium segments, it believes the middleweight segment (110-150 cc)

would remain a shrinking one. It has largely held on to its market leadership

on the domestic 3-W front, with market share at 57.1% in June 2019. Going

forward, the company expects tough times to continue domestically.

However, given the ~40% share of exports in total volumes, we believe BAL

remains relatively hedged against a domestic slowdown when compared to

peers. We expect BAL to continue to outperform the 2-W space, though 3-

W segment performance is expected to remain weak given the lack of

recovery in exports to Egypt. We build in 4.2% total volume CAGR in FY19-

21E (2-W CAGR 5.3%, 3-W CAGR negative 2.1%).

Margin recovery unlikely to be swift

Current EBITDA margins at ~15-16% is a far cry from BAL’s relatively recent

history of ~20% margin performance. Industry leading volume growth

following a desire of accelerated market share expansion has come at the

cost of margins. Higher regulatory and marketing costs along with above

normal inventory levels have also contributed to weakness in margins in the

past few quarters. The management believes there does not exist much

scope for further margin deterioration. We expect a margin recovery to be

gradual from here on given upcoming pressure that changeover to BS-VI

entails and the lack of any meaningful operating leverage. Accordingly, we

build in modest 15.7% EBITDA margins in FY20E & 14.8% in FY21E.

Valuation & Outlook

For BAL, we pencil in 8.7%, 2.9% and 2.2% CAGR for top line, EBITDA and

PAT, respectively, in FY19-21E. We value BAL at | 2,360 on SOTP valuation

methodology (implied P/E at 13.5x FY21E EPS vs. average two year forward

multiple at ~15x). We have a REDUCE recommendation on the stock.

Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)

Net Sales 21,766.7 25,164.9 30,250.0 32,248.6 35,731.2 8.7%

EBITDA 4,422.4 4,783.4 4,982.0 5,064.9 5,274.5 2.9%

EBITDA Margins (%) 20.3 19.0 16.5 15.7 14.8

Net Profit 3,827.6 4,068.1 4,675.1 4,644.2 4,880.8 2.2%

EPS (|) 132.3 140.6 161.6 160.5 168.7

P/E 18.8 17.7 15.4 15.5 14.8

RoNW (%) 22.5 21.5 19.9 19.1 18.1

RoCE (%) 23.5 22.9 21.0 19.2 25.3

Key Financial Summary

Source: ICICI Direct Research, Company

Particulars

Particular | crore

Market Capitalization 72,053.1

Total Debt (FY19) 124.5

Cash & Liquid Invests (FY19) 17,258.5

EV 54,919.1

52 week H/L (|) 3146 / 2400

Equity capital (|) 289.4

Face value (|) | 10

Key Highlights

Total volume growth was 2% but

higher ASPs helped post 4.5%

revenue growth in Q1FY20

Margins down 27 bps QoQ to 15.4%,

weighed by higher employee and

other expenses

The management expects muted

volume prospects, going ahead,

accompanied by range bound

margins (15-16% band)

Maintain REDUCE with revised target

price of | 2,360; valuing the core auto

manufacturing business at 13.5x P/E

on FY21E numbers

Research Analyst

Shashank Kanodia, CFA

[email protected]

Jaimin Desai

[email protected]

ICICI Securities | Retail Research 2

ICICI Direct Research

Result Update | Bajaj Auto

Exhibit 1: Variance Analysis

Q1FY20 Q1FY20E Q1FY19 YoY (%) Q4FY19 QoQ (%) Comments

Total Operating Income 7,756 7,623 7,419 4.5 7,395 4.9Topline came in ahead of our estimates primarily tracking an

increase in blended ASPs in the exports market

Raw Material Expenses 5,564 5,487 5,299 5.0 5,345 4.1

Employee Expenses 361 321 314 14.8 313 15.4

Other Expenses 639 586 529 20.8 586 9.0Other expenses came in a tad higher than estimates at 8.2% of

sales vs. our expectation of 7.7% of sales

EBITDA 1,198.2 1,237.1 1,281.4 -6.5 1,162.2 3.1

EBITDA Margin (%) 15.4 16.2 17.3 -182 bps 15.7 -27 bpsEBITDA margins came in lower primarily driven by negative

operating leverage amid muted volume growth

Other Income 441.3 478.7 404.4 9.1 432.7 2.0

Depreciation 60.1 66.2 70.0 -14.0 60.8 -1.1

Interest 1 0 0 NA 0 NA

Total Tax 453 503 500 -9.4 570 -20.5Tax rate for the quarter came in marginally down at 28.7% vs.

the usual trend of ~30%

Reported PAT 1125.7 1146.3 1115.2 0.9 1305.6 -13.8

EPS (|) 38.9 39.6 38.5 0.9 45.1 -13.8

Key Metrics

Revenue (| crore)

Domestic 4,515 4,557 4,116 9.7 4,565 -1.1 Domestic revenues came in line with our estimates

Exports 3,050 2,902 3,151 -3.2 2,660 14.7 Export revenues were higher tracking beat on ASPs

Blended ASP (|/ unit)

Domestic 64,764 65,368 59,771 8.4 64,086 1.1 Domestic ASP's were at | 64,764/unit

Exports 55,452 52,760 58,571 -5.3 55,274 0.3 Export market ASP's were at | 55,542/unit

Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates

(| Crore) Old New % Change Old New % Change Comments

Revenue 34,323 32,249 -6.0 38,228 35,731 -6.5

Lower volume estimates tracking muted demand scenario both in

domestic as well as export markets. We now expect revenues to grow

at a CAGR of 8.7% in FY19-21E

EBITDA 5,273 5,065 -3.9 5,479 5,274 -3.7

EBITDA Margin (%) 15.4 15.7 34 bps 14.3 14.8 43 bpsUpgrade margin estimates primarily tracking management commentary

of bottoming out of margins. Build in partial operating leverage benefits

PAT 4,791 4,644 -3.1 5,042 4,881 -3.2

EPS (|) 165.6 160.5 -3.1 174.2 168.7 -3.2

Decline in sales estimates coupled with marginal increase in margin

estimates leads to limited ~3% decline in EPS estimates for FY20E,

FY21E

FY20E FY21E


Exhibit 3: Assumptions

Comments

Units (mn) FY18 FY19P FY20E FY21E FY20E FY21E

Motorcycle volumes 3.4 4.2 4.4 4.7 4.7 5.1We expect motorcycle volumes to outpace industry growth rate

and expect it to grow at a CAGR of 5.3% over FY19-21E

Three-Wheeler volumes 0.6 0.8 0.7 0.7 0.8 0.8

The 3-W volumes are expected to decline at a CAGR of 2.2%

over FY19-21E factoring in muted demand prospects (domestic &

global)

Quadricycle volumes 0.0 0.0 0.0 0.0 0.0 0.0

Total volumes 4.0 5.0 5.1 5.4 5.4 5.9In total, we expect Bajaj to clock volume growth of 4.2% CAGR

over FY19-21E. Export growth expected to lag domestic growth

Export volumes 1.7 2.1 2.1 2.3 2.2 2.4

Domestic revenues (| crore) 15,396 18,099 19,472 22,126 21,482 24,281

Export revenues ($ mn) 1,400 1,642 1,723 1,834 1,714 1,875

US$INR Realisation rate 67 70 70 70 71 70 Exchange rate expected to stabilise around current range of ~70

Export ASP ($/unit) 872 790 802 797 778 780

Blended ASP (|/unit) 62,640 58,905 61,338 64,161 61,814 63,657

We expect ~4.4% CAGR increase in realisations primarily

factoring in greater regulatory compliance costs in terms of ABS

& BS-VI

Current Earlier





Conference call highlights

Management outlook/guidance and demand

The management expects the muted demand scenario to continue, with

July turning out to be worse than June. The upcoming festival season

would help mitigate the slowdown but the management is apprehensive

about it being able to lead a complete turnaround. BAL’s approach

would remain centred on outgrowing the industry significantly

The 3-W industry is expected to do relatively better in August and

September vs. Q1FY20. However, this is not seen as a structural uptrend

2-W industry export growth for FY20E would be limited to 2-3% YoY

3-W exports continue to remain impacted by pain in Egypt, with no

major uptick expected over the next ~6 months

The company is circumspect about consumer demand and existing

ecosystem on the electric 3-W front. However, it is prepared on the

product development side

Sales, costs and margins

BAL expects EBITDA margins to remain range bound around the current

levels in the near term

Higher ASP during the quarter can be attributed to ABS/CBS on the 2-W

side and 1.5-2.0% price hike taken on the 3-W portfolio in April

The company realised ~| 100/unit input cost benefit in Q1FY20 and

expects similar benefits in Q2FY20E on a QoQ basis

Higher other expenses in Q1FY20 were on account of larger advertising

spend on the 3-W and exports side

Export revenues for Q1FY20 was at | 3,050 crore, flattish YoY

Spare parts revenue for the quarter were at | 740 crore (| 550 crore

domestic, | 190 crore exports)

Other

Channel inventory was at seven to eight weeks of sales

Pulsar 150 cc has a ~five-year replacement cycle currently

Replacement cycle on the 3-W side can be as high as seven to eight

years

Dealer count currently is at 700 along with 3000 sub-dealers. BAL would

be adding another 40-50 dealers and 400 sub-dealers over the next six

months




Annual Report FY19 – Key takeaways

KTM volumes for FY19 were at 50,705 units making India its largest

market worldwide. KTM now has a presence in 460 showrooms in India

For FY19, BAL’s 3-W market share in diesel was at 37% (80% in small

diesel, 26% in large diesel). Domestic market share in petrol and

alternate fuels was at 86% (volumes of 2.8 lakh units)

Total export revenues (US$ terms) grew 20%+ in FY19 to $1.6 billion

Exhibit 4: Region-wise volume contribution of BAL FY19 exports

Source: Company

Quadricycle Qute was launched in Gujarat, Rajasthan, Kerala & Odisha.

Total 4,400 units of Qute were sold in various international markets

during 2018-19 against 1,605 units in 2017-18. During the year, 627 units

of Qute were sold in the domestic markets

Exhibit 5: Bajaj Auto’s capacity across plants


The management expects BAL to be ready with BS-VI in its entire

product range across products well before the April 2020 deadline.

However, lack of readiness from competitors could lead to intense price

competition




Financial story in charts

Exhibit 6: Total operating income trend

19,997

20,150

21,612

22,587

21,767

25,165

30,250

32,249

35,731

2

1

7

5

-4

16

20

7

11

(5)

-

5

10

15

20

25

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

FY13 FY14 FY15 FY16 FY17 FY18 FY19P FY20E FY21E

(%

)

(| crore)

Revenue % increase


Exhibit 7: Revenue mix

12,527

12,255

13,774

14,816

15,396

18,099

19,472

22,126

8,200

9,758

9,772

7,879

9,703

11,468

12,058

12,836

39.6

44.3

41.5

34.7

38.7 38.8 38.2

36.7

20

25

30

35

40

45

50

-

5,000

10,000

15,000

20,000

25,000

FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E

Domestic Exports % share of exports


Exhibit 8: Per vehicle metrics and estimates

44,611

60,657

22,000

27,000

32,000

37,000

42,000

47,000

52,000

57,000

62,000

67,000

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY20

(|)

Avg RM Cost Avg realisation


We expect total operating income to grow at a

CAGR of 8.7% over FY19-21E. It includes volume

growth CAGR of 4.2% and ASP’s growth CAGR of

4.4% over the aforesaid period

Export growth is expected to lag domestic growth

thereby leading to declining share of exports in the

overall revenue pie

ASPs for the quarter were a real surprise and were

at | 60,657/unit




Exhibit 9: EBITDA trend and margin profile

3,635

4,106

4,117

4,782

4,422

4,783

4,982

5,065

5,274

18.2

20.4

19.0

21.220.3

19.0

16.515.7

14.8

-

5

10

15

20

25

-

1,000

2,000

3,000

4,000

5,000

6,000


(%

)

(| crore)

EBITDA EBITDA margin


Exhibit 10: Profitability trend

3,044

3,243

2,814

3,930

3,828

4,068

4,675

4,644

4,881

15.216.1

13.0

17.4 17.6

16.215.5

14.413.7

-

2

4

6

8

10

12

14

16

18

20

-

1,000

2,000

3,000

4,000

5,000

6,000


(%

)

(| crore)

PAT PAT margin


EBITDA margin is expected to optically be on a

structural decline given higher costs incidence of

regulatory compliance (ABS & BS-VI)

PAT growth is expected to be muted at 2.2% CAGR

over FY19-21E. We expect Bajaj Auto to clock PAT

of | 4881 crore in FY21E (| 4675 crore in FY19)




Exhibit 11: Valuation Summary

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)

FY17 21,766.7 (3.6) 132.3 (2.6) 18.8 13.5 22.5 23.5

FY18 25,164.9 15.6 140.6 6.3 17.7 11.8 21.5 22.9

FY19 30,250.0 20.2 161.6 14.9 15.4 11.0 19.9 21.0

FY20E 32,248.6 6.6 160.5 -0.7 15.5 10.3 19.1 19.2

FY21E 35,731.2 10.8 168.7 5.1 14.8 9.4 18.1 25.3

Source: Bloomberg, ICICI Direct Research

Exhibit 12: SOTP valuation

SOTP Valuation Estimated

value

Per share (|) Remark

Core Business

FY21E EPS (|) 168.7

Multiple (x) 13.5 10% discount to long period average

Value per share (|) 2,276

Stake in KTM (48%)

KTM value derived back to Bajaj (| crore) 2440 2.0x of Invested Capital (| 1220 crore)

Value per share 84

Total Value per Share (|) 2,360


Exhibit 13: BAL currently trades at 14.8x its FY21E EPS

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Jul-09

Oct-09

Jan-10

Apr-10

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Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Apr-14

Jul-14

Oct-14

Jan-15

Apr-15

Jul-15

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Jan-16

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Jan-17

Apr-17

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Oct-17

Jan-18

Apr-18

Jul-18

Oct-18

Jan-19

Apr-19

Jul-19

(|)

Price 23x 21x 19x 17x 15x 14x 12x





Exhibit 14: Recommendation history vs. consensus

0.0

20.0

40.0

60.0

80.0

100.0

0

1,000

2,000

3,000

4,000

Jul-19Apr-19Jan-19Oct-18Jul-18May-18Feb-18Nov-17Aug-17May-17Feb-17Nov-16Aug-16

(%

)(|)

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Reuters, ICICI Direct Research

Exhibit 15: Top 10 shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)

1 Bajaj Group of Industries 30-Jun-19 0.5 141.1 0.00

2 Life Insurance Corporation of India 30-Jun-19 0.0 13.3 0.00

3 Firodia Group of Industries 30-Jun-19 0.0 9.7 0.00

4 Norges Bank Investment Management (NBIM) 31-Dec-17 0.0 4.3 0.08

5 Yamuna Trust 30-Jun-19 0.0 3.7 0.00

6 The Vanguard Group, Inc. 30-Jun-19 0.0 3.1 0.00

7 SBI Funds Management Pvt. Ltd. 30-Jun-19 0.0 3.0 -0.04

8 Lazard Asset Management, L.L.C. 30-Jun-19 0.0 2.9 -0.27

9 Bajaj (Rahulkumar) 30-Jun-19 0.0 2.8 0.00

10 BlackRock Institutional Trust Company, N.A. 30-Jun-19 0.0 2.5 -0.03


Exhibit 16: Recent activity

Investor name Value Shares Investor name Value Shares

Caisse de Depot et Placement du Quebec +36.49M +0.93M Lazard Asset Management, L.L.C. -11.14M -0.27M

Florida State Board of Administration +12.35M +0.29M Union Investment Luxembourg S.A. -3.98M -0.10M

Columbia Threadneedle Investments (US) +4.82M +0.12M Northern Trust Global Investments Limited -4.14M -0.10M

Axis Asset Management Company Limited +1.82M +0.04M Morgan Stanley Investment Management Ltd. (UK) -2.10M -0.05M

Kotak Mahindra Asset Management Company Ltd. +1.40M +0.03M Tata Asset Management Limited -2.19M -0.05M

Buys Sells


Exhibit 17: Shareholding pattern

(in %) Jun-18 Sep-18 Dec-18 Mar-19 Jun-19

Promoter 49.3 49.3 49.3 51.2 53.5

FII 16.7 16.4 16.1 15.6 15.7

DII 7.9 8.0 8.2 7.4 7.5

Others 26.0 26.3 26.4 25.8 23.3





Financial Summary

Exhibit 18: Profit and loss statement | crore

(Year-end March) FY18 FY19 FY20E FY21E

Total operating Income 25164.9 30250.0 32248.6 35731.2

Growth (%) 9.5 20.2 6.6 10.8

Raw Material Expenses 17,410.1 21,824.4 23,157.0 26,291.2

Employee Expenses 1,069.1 1,255.4 1,405.1 1,499.9

Other expenses 1,926.4 2,218.3 2,651.5 2,698.8

Total Operating Expenditure 20,381.5 25,268.0 27,183.7 30,456.7

EBITDA 4783.4 4982.0 5064.9 5274.5

Growth (%) -10.3 4.2 1.7 4.1

Depreciation 314.8 265.7 258.0 285.8

Interest 1.3 4.5 1.3 0.8

Other Income 1,347.3 1,649.3 1,835.8 1,984.8

PBT 5,814.6 6,361.1 6,641.3 6,972.6

Total Tax 1,714.5 2,028.0 1,997.2 2,091.8

PAT 4068.1 4675.1 4644.2 4880.8

Growth (%) 6.3 14.9 -0.7 5.1

EPS (|) 140.6 161.6 160.5 168.7


Exhibit 19: Cash flow statement | crore


Profit after Tax 4,068.1 4,675.1 4,644.2 4,880.8

Add: Depreciation 314.8 265.7 258.0 285.8

(Inc)/dec in Current Assets 355.3 -1,871.0 -33.3 -496.4

Inc/(dec) in CL and Provisions 1,013.3 557.4 196.1 445.3

CF from operating activities 5638.2 3836.7 5124.4 5202.7

(Inc)/dec in Investments -2,689.9 -1,571.1 -2,600.0 -2,600.0

(Inc)/dec in Fixed Assets -205.7 -142.8 -215.0 -215.0

Others -259.7 22.0 -95.0 -95.0

CF from investing activities -3155.2 -1691.8 -2910.0 -2910.0

Inc/(dec) in loan funds 0.9 3.8 -20.0 -20.0

Dividend paid & dividend tax -1,888.0 -2,083.5 -2,083.5 -2,257.1

Inc/(dec) in Sec. premium 0.0 0.0 0.0 0.0

CF from financing activities -1998.9 -1999.8 -2118.8 -2291.9

Net Cash flow 484.2 145.1 95.6 0.7

Opening Cash 293.7 777.8 922.9 1,018.4

Closing Cash 777.8 922.9 1018.4 1019.2


Exhibit 20: Balance Sheet | crore


Liabilities

Equity Capital 289.4 289.4 289.4 289.4

Reserve and Surplus 18,814.5 21,490.5 24,037.2 26,647.0

Total Shareholders funds 19103.8 21779.9 24326.6 26936.4

Total Debt 120.8 124.5 104.5 84.5

Deferred Tax Liability 323.4 542.7 542.7 542.7

Other non-current liabilities 1.4 1.1 1.1 1.1

Total Liabilities 19708.2 22506.7 25043.4 27643.1

Assets

Gross Block 4,506.3 4,637.8 4,829.3 5,029.3

Less: Acc Depreciation 2,627.9 2,893.6 3,151.6 3,437.4

Net Block 1,878.3 1,744.2 1,677.7 1,591.9

Capital WIP 11.2 11.5 20.0 20.0

Total Fixed Assets 1889.5 1755.7 1697.7 1611.9

Investments 17,588.3 19,159.4 21,809.4 24,459.4

Inventory 742.6 961.5 971.9 1,076.8

Debtors 1,491.9 2,559.7 2,650.6 2,936.8

Loans and Advances 6.3 6.3 6.8 7.5

Other current assets 216.3 295.6 212.3 417.1

Cash 777.8 922.9 1018.4 1019.2

Total Current Assets 3,470.2 5,486.3 5,615.1 6,112.3

Creditors 3,244.3 3,786.7 3,975.9 4,405.2

Provisions 125.6 140.6 147.6 163.6

Other current liabilities 0 477.1 604.3 546.2

Total Current Liabilities 4,111.3 4,873.7 5,127.8 5,659.4

Net Current Assets 128.8 -641.1 612.6 487.3

Deferred Tax asset 0.0 0.0 0.0 0.0

Application of Funds 19708.2 22506.7 25043.4 27643.1


Exhibit 21: Key ratios


Per share data (|)

EPS 140.6 161.6 160.5 168.7

Cash EPS 151.5 170.7 169.4 178.5

BV 660.2 752.7 840.7 930.9

DPS 60.0 60.0 60.0 65.0

Cash Per Share 26.9 31.9 35.2 35.2

Operating Ratios (%)

EBITDA Margin 19.0 16.5 15.7 14.8

PBT / Net sales 17.8 15.6 14.9 14.0

PAT Margin 16.2 15.5 14.4 13.7

Inventory days 10.8 11.6 11.0 11.0

Debtor days 21.6 30.9 30.0 30.0

Creditor days 47.1 45.7 45.0 45.0

Return Ratios (%)

RoE 22.9 21.0 19.2 25.3

RoCE 21.5 19.9 19.1 18.1

RoIC 123.7 101.9 109.0 114.4

Valuation Ratios (x)

Core P/E 17.6 16.6 15.5 14.8

EV / EBITDA 11.8 11.0 10.3 9.4

EV / Net Sales 2.3 1.8 1.6 1.4

Market Cap / Sales 2.9 2.4 2.2 2.0

Price to Book Value 3.8 3.3 3.0 2.7

Solvency Ratios

Current Ratio 0.7 1.0 1.0 1.0

Quick Ratio 0.5 0.8 0.8 0.8





Exhibit 22: ICICI Direct Research coverage universe (Auto & Auto Ancillary)

Sector / Company CMP M Cap

(|) TP(|) Rating (| Cr) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E

Amara Raja (AMARAJ) 650 590 Reduce 11105 28.3 31.1 33.8 22.3 20.3 18.6 11.0 9.7 8.7 21.2 21.0 20.5 14.5 14.3 14.0

Apollo Tyre (APOTYR) 155 180 Hold 8841 11.9 16.8 21.5 15.8 11.2 8.7 6.8 6.8 5.6 8.2 8.6 10.2 8.3 9.0 10.5

Ashok Leyland (ASHLEY) 72 100 Hold 21048 6.8 5.9 5.3 10.6 12.2 13.6 8.1 8.6 9.0 27.5 24.1 20.9 24.4 19.3 16.5

Bajaj Auto (BAAUTO) 2490 2360 Reduce 72053 161.6 160.5 168.7 15.4 15.5 14.8 11.0 10.3 9.4 21.0 19.2 25.3 19.9 19.1 18.1

Balkrishna Ind. (BALIND) 719 740 Hold 13899 40.5 40.9 45.3 19.2 19.0 17.2 11.8 10.6 9.1 20.4 19.0 19.3 16.7 19.0 19.3

Bharat Forge (BHAFOR) 428 535 Buy 32590 22.2 23.8 25.4 21.0 19.5 18.3 11.9 11.0 10.3 18.4 18.5 19.1 19.1 17.9 17.5

Bosch (MICO) 14800 15550 Reduce 45171 523.6 538.6 573.1 32.5 31.6 29.7 23.3 22.0 20.5 17.5 15.9 15.0 25.8 23.5 22.3

Eicher Motors (EICMOT) 16376 19000 Hold 44641 808.1 902.5 1032.7 23.2 20.8 18.2 16.6 14.5 12.0 32.5 29.5 28.5 24.8 22.6 21.4

Escorts (ESCORT) 473 600 Hold 5801 39.6 42.0 48.1 16.7 15.7 13.7 10.6 9.1 7.8 21.0 21.7 21.6 15.6 14.7 14.6

Exide Industries (EXIIND) 182 200 Reduce 15479 9.1 9.5 10.4 21.7 22.5 20.8 12.7 11.8 10.7 18.4 17.8 17.5 12.9 12.3 12.1

Hero Moto (HERHON) 2403 2700 Hold 47991 169.5 173.0 192.1 14.8 14.5 13.1 9.2 8.8 7.5 37.1 34.4 34.9 26.3 24.3 24.5

JK Tyre & Ind (JKIND) 72 100 Buy 1633 7.8 4.6 7.9 10.3 17.4 10.1 6.3 7.2 6.2 10.9 9.1 10.5 10.3 6.5 9.5

Mahindra CIE (MAHAUT) 179 230 Buy 6778 13.2 14.1 17.1 14.8 13.8 11.4 7.8 7.8 6.4 12.4 11.1 11.9 13.2 12.6 14.2

Maruti Suzuki (MARUTI) 5556 5000 Reduce 167828 248.3 221.2 250.0 22.8 25.5 22.6 12.3 13.6 11.6 16.3 12.0 13.0 16.3 13.4 13.9

Motherson (MOTSUM) 108 125 Hold 34027 5.1 5.0 6.5 23.5 23.9 18.4 8.5 8.5 6.6 13.5 12.3 16.0 14.7 13.2 15.5

Tata Motors (TELCO) 138 160 Hold 50934 -84.6 9.3 21.4 -1.8 16.1 7.0 3.9 3.6 3.1 5.4 9.1 11.3 7.1 9.8 15.4

Wabco India (WABTVS) 6090 6510 Hold 11551 148.8 157.7 178.3 41.7 39.3 34.8 26.6 24.5 21.5 15.9 14.5 14.3 23.0 21.4 21.0

RoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)





RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




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