Description
The report on Financial Performance of Bajaj Auto.
Investment Valuation Ratios
MAR¶06 Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Earnings Per Share Book Value 10.00 40.00 126.44 MAR¶07 10.00 40.00 131.39 MAR¶08 10.00 20.00 75.01 MAR¶09 10.00 22.00 75.52 MAR¶ 10 10.00 40.00 171.89
748.36 459.69 112.84 108.87 471.49
931.01 535.16 112.84 122.35 546.96
610.10 99.73 78.91 52.25 109.73
601.32 106.56 78.91 45.37 129.23
816.49 190.09 78.91 117.69 202.40
Profitability Ratios
MAR¶06 MAR¶07 MAR¶08 MAR¶09 MAR¶ 10
Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excl. Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%)
16.89 13.70 14.37 14.73 14.73 13.86 13.86 23.32 23.09 20.45 11.05 11.05 23.32
14.11 11.65 12.09 12.18 12.18 12.66 12.66 20.90 22.36 18.09 546.96 546.96 20.97
12.29 10.03 10.32 10.48 10.48 8.32 8.32 39.71 47.61 48.91 109.73 109.73 39.71
12.55 10.86 11.06 10.53 10.53 7.40 7.40 32.75 38.92 47.68
21.05 19.64 19.89 16.08 16.08 14.23 14.23 58.63 58.14 61.06
116.56 202.40 116.56 202.40 35.31 58.80
Liquidity And Solvency Ratios
MAR¶06 Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio 0.79 0.69 0.31 0.31 MAR¶07 0.84 0.76 0.29 0.29 MAR¶08 0.88 0.64 0.84 0.84 MAR¶09 0.84 0.73
Management has more or less maintained the good performance here
MAR¶ 10 0.69 0.55 0.46 0.45
0.84 0.71
Debt Coverage Ratios
Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax 4,280.03 0.31 4,852.44 3,813.50 280.28 0.29 315.98 268.53 224.91 0.84 258.84 181.43 53.63 0.84 59.81 38.42 418.34 0.46 441.16 308.56
Management Efficiency Ratios
40
MAR¶06 34.14 -34.14 2.62 1.21 2.62
MAR¶07 36.88 22.66 36.88 2.96 1.32 2.96
MAR¶08 29.33 21.93 29.33 2.95 3.02 2.95
MAR¶09 28.64 27.45 28.64
MAR¶ 10 28.87 37.41 28.87
Inventory 35 Turnover Ratio Debtors 30 Turnover Ratio Investments Turnover Ratio 25 Fixed Assets Turnover Ratio 20 Total Assets Turnover Ratio 15 Asset Turnover Ratio 10
5
Management has improved ( more liquid )debtors turnover ratio
Inventory Turnover Ratio Debtors 2.60 Turnover Ratio3.50 Investments Turnover Ratio Fixed Assets Turnover Ratio Total 2.53 Assets Turnover Ratio 2.77 Asset Turnover Ratio
2.60
3.50
0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Management Efficiency Ratios
20
MAR¶06
MAR¶07
MAR¶08
MAR¶09
MAR¶ 10
Average Raw Material Holding 10 Average Finished Goods Held Number of Days In Working Capital 0
Mar '06 Mar '07 Mar '08
4.89 8.12 -37.82
Mar '09
5.08 8.14 -25.57
Mar '10
5.24 10.73 -9.73
6.39 9.97 -8.31
7.91 9.11 -41.29
-10 Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital -20
-30
Management has improved this key metric in one FY by effective credit policy viz sales on cash , sourcing inputs on credit
-40
-50
Cash & Loss Account Ratios ProfitFlow Indicator Ratios
90
MAR¶06
MAR¶07
MAR¶08 MAR¶09 MAR¶ 10 Management has improved
by retaining more earnings 76.58 74.73 69.30
Material Cost Composition 80 Imported Composition of Raw Materials Consumed 70 Selling Distribution Cost Composition 60 Expenses as Composition of Total Sales 50
40
71.92 4.58 3.41 12.46
73.98 5.56 4.45 18.36
2.37
2.35
3.59
Material Cost Composition
3.98 Composition of Raw Materials 3.97 3.23 Imported
Consumed
23.53
Selling Distribution Cost Composition
30.82
27.67
Expenses as Composition of Total Sales Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit
30
41.89 35.60 52.71 60.57
38.24 33.14 52.71 60.28
Mar '10
44.78
56.72
39.63
Earning Retention Ratio Cash 36.36 Earning Retention Ratio 36.69 47.36 AdjustedCash Flow Times
Dividend Payout Ratio Cash Profit
20
Earning Retention Ratio
10
56.41 64.43 1.40
53.70 60.13 1.68
62.27 64.94 0.70
Cash Earning Retention Ratio AdjustedCash FlowMar '07 Times Mar '06
0 Mar '08
Mar '09
1.25
1.36
Summary
Bajaj Auto has strong financials and also there is year on year improvement on various key financial metrics. High growth was also aided by higher operating leverage and robust volume growth in the domestic as well as export markets. Net Sales in line, Profit ahead of expectation Product mix focus on two key brands, the Discover and Pulsar is key factor in growth. Capacity constraints, however, restricted volume growth to a certain extent. For shareholders though, there is a sense of marginally reduced payouts.
Recommendations
Remove capacity bottlenecks via contract manufacturing Increase production at tax break factories Continue to take exchange rate benefits form exports Negotiate better input costs which account for about 66 % of sales Continue to reduce or hold the sales & admin expense , other cost reduction measures Maintain leadership in 125 cc segment and improve performance in lagging 100 cc segment domestically Increase international market ( Africa, SE Asia) presence. Innovation and growth by world class products.
doc_248312517.pdf
The report on Financial Performance of Bajaj Auto.
Investment Valuation Ratios
MAR¶06 Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Earnings Per Share Book Value 10.00 40.00 126.44 MAR¶07 10.00 40.00 131.39 MAR¶08 10.00 20.00 75.01 MAR¶09 10.00 22.00 75.52 MAR¶ 10 10.00 40.00 171.89
748.36 459.69 112.84 108.87 471.49
931.01 535.16 112.84 122.35 546.96
610.10 99.73 78.91 52.25 109.73
601.32 106.56 78.91 45.37 129.23
816.49 190.09 78.91 117.69 202.40
Profitability Ratios
MAR¶06 MAR¶07 MAR¶08 MAR¶09 MAR¶ 10
Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excl. Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%)
16.89 13.70 14.37 14.73 14.73 13.86 13.86 23.32 23.09 20.45 11.05 11.05 23.32
14.11 11.65 12.09 12.18 12.18 12.66 12.66 20.90 22.36 18.09 546.96 546.96 20.97
12.29 10.03 10.32 10.48 10.48 8.32 8.32 39.71 47.61 48.91 109.73 109.73 39.71
12.55 10.86 11.06 10.53 10.53 7.40 7.40 32.75 38.92 47.68
21.05 19.64 19.89 16.08 16.08 14.23 14.23 58.63 58.14 61.06
116.56 202.40 116.56 202.40 35.31 58.80
Liquidity And Solvency Ratios
MAR¶06 Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio 0.79 0.69 0.31 0.31 MAR¶07 0.84 0.76 0.29 0.29 MAR¶08 0.88 0.64 0.84 0.84 MAR¶09 0.84 0.73
Management has more or less maintained the good performance here
MAR¶ 10 0.69 0.55 0.46 0.45
0.84 0.71
Debt Coverage Ratios
Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax 4,280.03 0.31 4,852.44 3,813.50 280.28 0.29 315.98 268.53 224.91 0.84 258.84 181.43 53.63 0.84 59.81 38.42 418.34 0.46 441.16 308.56
Management Efficiency Ratios
40
MAR¶06 34.14 -34.14 2.62 1.21 2.62
MAR¶07 36.88 22.66 36.88 2.96 1.32 2.96
MAR¶08 29.33 21.93 29.33 2.95 3.02 2.95
MAR¶09 28.64 27.45 28.64
MAR¶ 10 28.87 37.41 28.87
Inventory 35 Turnover Ratio Debtors 30 Turnover Ratio Investments Turnover Ratio 25 Fixed Assets Turnover Ratio 20 Total Assets Turnover Ratio 15 Asset Turnover Ratio 10
5
Management has improved ( more liquid )debtors turnover ratio
Inventory Turnover Ratio Debtors 2.60 Turnover Ratio3.50 Investments Turnover Ratio Fixed Assets Turnover Ratio Total 2.53 Assets Turnover Ratio 2.77 Asset Turnover Ratio
2.60
3.50
0 Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Management Efficiency Ratios
20
MAR¶06
MAR¶07
MAR¶08
MAR¶09
MAR¶ 10
Average Raw Material Holding 10 Average Finished Goods Held Number of Days In Working Capital 0
Mar '06 Mar '07 Mar '08
4.89 8.12 -37.82
Mar '09
5.08 8.14 -25.57
Mar '10
5.24 10.73 -9.73
6.39 9.97 -8.31
7.91 9.11 -41.29
-10 Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital -20
-30
Management has improved this key metric in one FY by effective credit policy viz sales on cash , sourcing inputs on credit
-40
-50
Cash & Loss Account Ratios ProfitFlow Indicator Ratios
90
MAR¶06
MAR¶07
MAR¶08 MAR¶09 MAR¶ 10 Management has improved
by retaining more earnings 76.58 74.73 69.30
Material Cost Composition 80 Imported Composition of Raw Materials Consumed 70 Selling Distribution Cost Composition 60 Expenses as Composition of Total Sales 50
40
71.92 4.58 3.41 12.46
73.98 5.56 4.45 18.36
2.37
2.35
3.59
Material Cost Composition
3.98 Composition of Raw Materials 3.97 3.23 Imported
Consumed
23.53
Selling Distribution Cost Composition
30.82
27.67
Expenses as Composition of Total Sales Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit
30
41.89 35.60 52.71 60.57
38.24 33.14 52.71 60.28
Mar '10
44.78
56.72
39.63
Earning Retention Ratio Cash 36.36 Earning Retention Ratio 36.69 47.36 AdjustedCash Flow Times
Dividend Payout Ratio Cash Profit
20
Earning Retention Ratio
10
56.41 64.43 1.40
53.70 60.13 1.68
62.27 64.94 0.70
Cash Earning Retention Ratio AdjustedCash FlowMar '07 Times Mar '06
0 Mar '08
Mar '09
1.25
1.36
Summary
Bajaj Auto has strong financials and also there is year on year improvement on various key financial metrics. High growth was also aided by higher operating leverage and robust volume growth in the domestic as well as export markets. Net Sales in line, Profit ahead of expectation Product mix focus on two key brands, the Discover and Pulsar is key factor in growth. Capacity constraints, however, restricted volume growth to a certain extent. For shareholders though, there is a sense of marginally reduced payouts.
Recommendations
Remove capacity bottlenecks via contract manufacturing Increase production at tax break factories Continue to take exchange rate benefits form exports Negotiate better input costs which account for about 66 % of sales Continue to reduce or hold the sales & admin expense , other cost reduction measures Maintain leadership in 125 cc segment and improve performance in lagging 100 cc segment domestically Increase international market ( Africa, SE Asia) presence. Innovation and growth by world class products.
doc_248312517.pdf