1. Date - 04th June, 2012Date - 04th June, 2012Date - 04 June, 2012
Bajaj Auto Ltd. - BUYBajaj Auto Ltd. - BUYBajaj Auto Ltd. - BUYBajaj Auto Ltd. - BUYBajaj Auto Ltd. - BUY
CMP - INR 1475.00 TP - INR 1825.00CMP - INR 1475.00 TP - INR 1825.00CMP - INR 1475.00 TP - INR 1825.00
TH - 12 Months Up Side - 19.45 %TH - 12 Months Up Side - 19.45 %
We initiate investment note on Bajaj Auto Ltd. as a BUY withWe initiate investment note on Bajaj Auto Ltd. as a BUY withWe initiate investment note on Bajaj Auto Ltd. as a BUY with
(Based on DCF valuation). At CMP of 1475 the stock is trading(Based on DCF valuation). At CMP of 1475 the stock is trading(Based on DCF valuation). At CMP of 1475 the stock is trading
its estimated earnings for FY13E & FY14E representing a potentialits estimated earnings for FY13E & FY14E representing a potentialits estimated earnings for FY13E & FY14E representing a potential
over a period of 12 months. While the two wheeler industryover a period of 12 months. While the two wheeler industryover a period of 12 months. While the two wheeler industry
growth over the medium term, we expect Bajaj Auto togrowth over the medium term, we expect Bajaj Auto to
industry. Accordingly, top and bottom line numbers are expected
growth over the medium term, we expect Bajaj Auto to
industry. Accordingly, top and bottom line numbers are expectedindustry. Accordingly, top and bottom line numbers are expected
of 11% and 12% respectively over the period of FY12 to FYof 11% and 12% respectively over the period of FY12 to FYof 11% and 12% respectively over the period of FY12 to FY
growth are a well diversified product portfolio, strong volumegrowth are a well diversified product portfolio, strong volumegrowth are a well diversified product portfolio, strong volume
area and better realizations. Having established a base in overseas,area and better realizations. Having established a base in overseas,area and better realizations. Having established a base in overseas,
(currently 15% of total revenues) are expected to grow at a faster(currently 15% of total revenues) are expected to grow at a faster(currently 15% of total revenues) are expected to grow at a faster
a significant contribute to the revenues in the long term.a significant contribute to the revenues in the long term.a significant contribute to the revenues in the long term.
Investment rationalesInvestment rationalesInvestment rationales
Strong focus on core segmentStrong focus on core segmentStrong focus on core segment
Bajaj auto highly focused on their pulsar and discover models.Bajaj auto highly focused on their pulsar and discover models.Bajaj auto highly focused on their pulsar and discover models.
the leader of 150cc and 125cc segment and contributed 70the leader of 150cc and 125cc segment and contributed 70the leader of 150cc and 125cc segment and contributed 70
members. The yoy growth in both the segment is 30 percentmembers. The yoy growth in both the segment is 30 percent
respectively. Due to higher demand in 150cc and 125cc segmentrespectively. Due to higher demand in 150cc and 125cc segmentrespectively. Due to higher demand in 150cc and 125cc segment
launched new discover 125cc with most competitive price of 42000launched new discover 125cc with most competitive price of 42000launched new discover 125cc with most competitive price of 42000
launched 150cc new look pulsar in the mid of FY13. The saleslaunched 150cc new look pulsar in the mid of FY13. The saleslaunched 150cc new look pulsar in the mid of FY13. The sales
discover for FY13 is 2 million and 2.5 million respectively, againstdiscover for FY13 is 2 million and 2.5 million respectively, againstdiscover for FY13 is 2 million and 2.5 million respectively, against
1.8 million and 2 million. We expect that due to new launch in1.8 million and 2 million. We expect that due to new launch in1.8 million and 2 million. We expect that due to new launch in
current demand trend the sales target for both the segment seemscurrent demand trend the sales target for both the segment seemscurrent demand trend the sales target for both the segment seems
achieve.achieve.
Potential growth in international market
achieve.
Potential growth in international marketPotential growth in international market
Bajaj Auto registered a strong export CAGR of 35% during FY2006Bajaj Auto registered a strong export CAGR of 35% during FY2006Bajaj Auto registered a strong export CAGR of 35% during FY2006
CAGR in two-wheeler exports and a 25% CAGR in three wheelerCAGR in two-wheeler exports and a 25% CAGR in three wheelerCAGR in two-wheeler exports and a 25% CAGR in three wheeler
we estimate BJAUT to register a 25% CAGR over FY2011-13we estimate BJAUT to register a 25% CAGR over FY2011-13we estimate BJAUT to register a 25% CAGR over FY2011-13
demand outlook from the exports market. BJAUT has hedgeddemand outlook from the exports market. BJAUT has hedgeddemand outlook from the exports market. BJAUT has hedged
exports at a USD-INR rate of `47-51. The recent sharp depreciationexports at a USD-INR rate of `47-51. The recent sharp depreciationexports at a USD-INR rate of `47-51. The recent sharp depreciation
the USD is expected to further aid exports profitabilitythe USD is expected to further aid exports profitabilitythe USD is expected to further aid exports profitability
with a target price of 1825with a target price of 1825with a target price of 1825
trading at 12.44x and 11.19x Market Datatrading at 12.44x and 11.19x Market Data
Sector Auto - two wheelers
trading at 12.44x and 11.19x
potential upside of 19.45% Sector Auto - two wheelers
potential upside of 19.45% Sector Auto - two wheelers
Sensex 15988
potential upside of 19.45%
expected to sustain its
Sensex 15988
expected to sustain its
Sensex 15988
Equity Shares (Cr) 28.94
expected to sustain its
grow faster than the
Equity Shares (Cr) 28.94
Face Value (INR) 10grow faster than the
expected to grow at a CAGR
Face Value (INR) 10grow faster than the
expected to grow at a CAGR
Face Value (INR) 10
52-wk HI/LO (INR) 1839/1351expected to grow at a CAGR
FY15. Key drivers of this
52-wk HI/LO (INR) 1839/1351
FY15. Key drivers of this
52-wk HI/LO (INR) 1839/1351
O/S shares (Cr) 28.94FY15. Key drivers of this
volume growth from rural
O/S shares (Cr) 28.94
Market Cap (Cr) 42682.08volume growth from rural Market Cap (Cr) 42682.08volume growth from rural
overseas, export revenues
Market Cap (Cr) 42682.08
Avg. Daily Vol.(000) 521.74overseas, export revenues Avg. Daily Vol.(000) 521.74overseas, export revenues
faster space and becomefaster space and become
Y/E Mar Cr FY12A FY13E FY14E FY15E
faster space and become
Y/E Mar Cr FY12A FY13E FY14E FY15EY/E Mar Cr FY12A FY13E FY14E FY15E
Net Sales 19529 21438 23848 26528Net Sales 19529 21438 23848 26528
OP 3556 3911 4361 4866OP 3556 3911 4361 4866OP 3556 3911 4361 4866
Net Profit 3004 3432 3814 4237Net Profit 3004 3432 3814 4237Net Profit 3004 3432 3814 4237
EPS 104 119 132 146
. These two models are
EPS 104 119 132 146
DPS 45 59 71 83. These two models are DPS 45 59 71 83. These two models are
70 percent to top line
DPS 45 59 71 83
CEPS 54 127 120 10970 percent to top line CEPS 54 127 120 109
ROA (%) 43.6% 47.5% 49.5% 52.3%
70 percent to top line
percent and 45 percent ROA (%) 43.6% 47.5% 49.5% 52.3%percent and 45 percent
segment Bajaj auto has
ROA (%) 43.6% 47.5% 49.5% 52.3%
ROE (%) 54.9% 50.7% 46.5% 44.0%segment Bajaj auto has ROE (%) 54.9% 50.7% 46.5% 44.0%segment Bajaj auto has
42000rs and will plan to
ROE (%) 54.9% 50.7% 46.5% 44.0%
EV/EBITDA(x) 9.6 9.8 9.7 9.5
42000rs and will plan to
EV/EBITDA(x) 9.6 9.8 9.7 9.5
P/E 14.2 12.4 11.2 10.1
42000rs and will plan to
sales target of pulsar and
P/E 14.2 12.4 11.2 10.1
sales target of pulsar and
P/E 14.2 12.4 11.2 10.1
P/BV 7.1 5.7 4.8 4.1sales target of pulsar and
against the last year sale of
P/BV 7.1 5.7 4.8 4.1
against the last year sale ofagainst the last year sale of
in both the segment and Holding (%)in both the segment and Holding (%)in both the segment and
seems most possible to
Holding (%)
Promoter Group (A) 50.00%seems most possible to Promoter Group (A) 50.00%
(1) Institutions 33.30%
seems most possible to
(1) Institutions 33.30%(1) Institutions 33.30%
(2) Non-Institutions 16.70%(2) Non-Institutions 16.70%
2006-11, aided by a 40%
(2) Non-Institutions 16.70%
Total 100.00%
2006-11, aided by a 40%
Total 100.00%
2006-11, aided by a 40%
wheeler exports. Going ahead,wheeler exports. Going ahead, Analyst Detailswheeler exports. Going ahead,
13E, driven by a strong
Analyst Details
13E, driven by a strong Pushkaraj Jamsandekar13E, driven by a strong
hedged 90-95% of its FY2012
Pushkaraj Jamsandekar
Contact - +09869139507hedged 90-95% of its FY2012 Contact - +09869139507hedged 90-95% of its FY2012
depreciation of the INR against
Contact - +09869139507
Mail ID - pushkarajjamsandekar@yahoo.comdepreciation of the INR against Mail ID - pushkarajjamsandekar@yahoo.com
Perception Research & Advisory
depreciation of the INR against
Perception Research & AdvisoryPerception Research & Advisory

2. Favorable monsoonFavorable monsoonFavorable monsoon
Bajaj Auto has good presences in rural area, where the monsoonBajaj Auto has good presences in rural area, where the monsoon
factor for two wheeler sales. The past four year trend of monsoonfactor for two wheeler sales. The past four year trend of monsoonfactor for two wheeler sales. The past four year trend of monsoon
highly correlative. We expect that the positive monsoon for thishighly correlative. We expect that the positive monsoon for thishighly correlative. We expect that the positive monsoon for this
auto industry for impressive numbers.auto industry for impressive numbers.auto industry for impressive numbers.
ValuationValuationValuation
At CMP of 1475 the stock is trading at 12.44x and 11.19x itsAt CMP of 1475 the stock is trading at 12.44x and 11.19x itsAt CMP of 1475 the stock is trading at 12.44x and 11.19x its
FY13E & FY14E representing a potential upside of 19.45%, targetFY13E & FY14E representing a potential upside of 19.45%, targetFY13E & FY14E representing a potential upside of 19.45%, target
period of 12 months. While the two wheeler industry expectedperiod of 12 months. While the two wheeler industry expected
over the medium term, we expect Bajaj Auto to grow faster than
period of 12 months. While the two wheeler industry expected
over the medium term, we expect Bajaj Auto to grow faster thanover the medium term, we expect Bajaj Auto to grow faster than
monsoon is the importantmonsoon is the important
monsoon and auto industry ismonsoon and auto industry ismonsoon and auto industry is
this year again supportthis year again supportthis year again support
estimated earnings forestimated earnings forestimated earnings for
target price of 1825 over atarget price of 1825 over atarget price of 1825 over a
expected to sustain its growthexpected to sustain its growth
than the industry.
expected to sustain its growth
than the industry.than the industry.

3. Financials of Bajaj Auto Ltd.Financials of Bajaj Auto Ltd.Financials of Bajaj Auto Ltd.
Exhibit 1: Bajaj Auto Ltd. Financials (Rs In Cr)Exhibit 1: Bajaj Auto Ltd. Financials (Rs In Cr)
Profit And Loss A/C FY11A FY12A FY13E FY14E FY15E Cash Flow statementProfit And Loss A/C FY11A FY12A FY13E FY14E FY15E Cash Flow statement
Net Sales 16398 19529 21438 23848 26528 Profit Before TaxNet Sales 16398 19529 21438 23848 26528 Profit Before TaxNet Sales 16398 19529 21438 23848 26528 Profit Before Tax
Growth - 19% 10% 11% 11% AdjustmentGrowth - 19% 10% 11% 11% Adjustment
Cost of sales 12806 15258 16857 18752 20859 Changes In WCCost of sales 12806 15258 16857 18752 20859 Changes In WCCost of sales 12806 15258 16857 18752 20859 Changes In WC
Depreciation 123 146 151 158 160 CF after changes in WCDepreciation 123 146 151 158 160 CF after changes in WC
Gross Profit 3469 4126 4430 4938 5508 CF From Op. ActivitiesGross Profit 3469 4126 4430 4938 5508 CF From Op. ActivitiesGross Profit 3469 4126 4430 4938 5508 CF From Op. Activities
Growth - 19% 7% 11% 12% CF from Inv. ActivitiesGrowth - 19% 7% 11% 12% CF from Inv. Activities
S&A Expenses 64 70 68 75 84 CF Fin. ActivitiesS&A Expenses 64 70 68 75 84 CF Fin. ActivitiesS&A Expenses 64 70 68 75 84 CF Fin. Activities
Ad expenses 194 271 226 251 279 Net Inflow / OutflowAd expenses 194 271 226 251 279 Net Inflow / Outflow
Miss Expenses 179 229 226 251 279 Opening CFMiss Expenses 179 229 226 251 279 Opening CF
Operating profit 3032 3556 3911 4361 4866 Closing CFOperating profit 3032 3556 3911 4361 4866 Closing CFOperating profit 3032 3556 3911 4361 4866 Closing CF
growth - 17% 10% 12% 12%growth - 17% 10% 12% 12%
Other income 592 627 716 776 836Other income 592 627 716 776 836Other income 592 627 716 776 836
Net interest 2 22 20 17 15 Ratio And ValuationNet interest 2 22 20 17 15 Ratio And Valuation
Pre tax Income 4348 4026 4607 5119 5687 Adjusted EPS (Rs.)Pre tax Income 4348 4026 4607 5119 5687 Adjusted EPS (Rs.)Pre tax Income 4348 4026 4607 5119 5687 Adjusted EPS (Rs.)
Income tax 1008 1022 1175 1305 1450 Adjusted PE (x)Income tax 1008 1022 1175 1305 1450 Adjusted PE (x)
Post Tax Income 3340 3004 3432 3814 4237 PCE(x)Post Tax Income 3340 3004 3432 3814 4237 PCE(x)Post Tax Income 3340 3004 3432 3814 4237 PCE(x)
Price / Book Value(x)Price / Book Value(x)
Dividend Yield(%)Dividend Yield(%)Dividend Yield(%)
Balance Sheet FY11A FY12A FY13E FY14E FY15E EV/Net Sales(x)Balance Sheet FY11A FY12A FY13E FY14E FY15E EV/Net Sales(x)
Net Fixed Assets 1483 1482 1528 1442 1345 EV/EBITDA(x)Net Fixed Assets 1483 1482 1528 1442 1345 EV/EBITDA(x)
WIP 70 42 40 40 40 EV/EBIT(x)WIP 70 42 40 40 40 EV/EBIT(x)
Investments 5351 5464 5964 6464 6964 EV/CE(x)Investments 5351 5464 5964 6464 6964 EV/CE(x)
Current assets 2344 4094 5108 6600 8204 M Cap / SalesCurrent assets 2344 4094 5108 6600 8204 M Cap / SalesCurrent assets 2344 4094 5108 6600 8204 M Cap / Sales
Inventories 547 679 704 780 868 ROA (%)Inventories 547 679 704 780 868 ROA (%)
Sundry Debtors 360 423 590 653 726 ROE (%)Sundry Debtors 360 423 590 653 726 ROE (%)Sundry Debtors 360 423 590 653 726 ROE (%)
Cash and Bank 229 1654 2235 3409 4655 ROCE (%)Cash and Bank 229 1654 2235 3409 4655 ROCE (%)
Other Current Assets 1099 1119 1354 1506 1675 Asset Turnover(x)Other Current Assets 1099 1119 1354 1506 1675 Asset Turnover(x)Other Current Assets 1099 1119 1354 1506 1675 Asset Turnover(x)
Loans and Advances 110 219 226 251 279 Inventory Turnover(x)Loans and Advances 110 219 226 251 279 Inventory Turnover(x)
Current Liabilities 3855 4625 4792 5318 5916 CEPS (Rs)Current Liabilities 3855 4625 4792 5318 5916 CEPS (Rs)Current Liabilities 3855 4625 4792 5318 5916 CEPS (Rs)
Creditors 2424 2562 2535 2808 3124 DPS (Rs)Creditors 2424 2562 2535 2808 3124 DPS (Rs)
Other 1431 2063 2257 2510 2792 Dividend Pay Out Ratio(%)Other 1431 2063 2257 2510 2792 Dividend Pay Out Ratio(%)Other 1431 2063 2257 2510 2792 Dividend Pay Out Ratio(%)
Net Current Assets -1511 -532 316 1282 2288 Sales Growth (%)Net Current Assets -1511 -532 316 1282 2288 Sales Growth (%)
Long Term debt 452 366 326 286 246 EBITDA Growth(%)Long Term debt 452 366 326 286 246 EBITDA Growth(%)
Defer Tax -30 -48 -35 -37 -39 PAT Growth(%)Defer Tax -30 -48 -35 -37 -39 PAT Growth(%)Defer Tax -30 -48 -35 -37 -39 PAT Growth(%)
Net Worth 4910 6041 7486 8904 10352 Gross Profit Margin (%)Net Worth 4910 6041 7486 8904 10352 Gross Profit Margin (%)
Share Capital 289 289 289 289 289 Operating Profit Margin (%)Share Capital 289 289 289 289 289 Operating Profit Margin (%)Share Capital 289 289 289 289 289 Operating Profit Margin (%)
Total Reserves 4621 5752 7197 8615 10062 EBITDA Margin(%)Total Reserves 4621 5752 7197 8615 10062 EBITDA Margin(%)
Net Worth 4910 6041 7486 8904 10352 Net Profit Margin (%)Net Worth 4910 6041 7486 8904 10352 Net Profit Margin (%)Net Worth 4910 6041 7486 8904 10352 Net Profit Margin (%)
Source: Perception Research & AdvisorySource: Perception Research & Advisory
Cash Flow statement FY11A FY12A FY13E FY14E FY15ECash Flow statement FY11A FY12A FY13E FY14E FY15E
Profit Before Tax 4348 4026 4607 5119 5687Profit Before Tax 4348 4026 4607 5119 5687Profit Before Tax 4348 4026 4607 5119 5687
Adjustment -938 2 171 175 175Adjustment -938 2 171 175 175
Changes In WC -822 80 -460 -45 -43Changes In WC -822 80 -460 -45 -43Changes In WC -822 80 -460 -45 -43
CF after changes in WC 2588 4108 4543 5142 5693CF after changes in WC 2588 4108 4543 5142 5693
CF From Op. Activities 1614 2960 3368 3837 4243CF From Op. Activities 1614 2960 3368 3837 4243CF From Op. Activities 1614 2960 3368 3837 4243
CF from Inv. Activities -623 -445 -540 -539 -538CF from Inv. Activities -623 -445 -540 -539 -538
CF Fin. Activities -862 -1564 -1773 -2123 -2459CF Fin. Activities -862 -1564 -1773 -2123 -2459CF Fin. Activities -862 -1564 -1773 -2123 -2459
Net Inflow / Outflow 129 950 1056 1175 1246Net Inflow / Outflow 129 950 1056 1175 1246
Opening CF 100 229 1179 2235 3409Opening CF 100 229 1179 2235 3409
Closing CF 229 1179 2235 3409 4655Closing CF 229 1179 2235 3409 4655Closing CF 229 1179 2235 3409 4655
Ratio And Valuation FY11A FY12A FY13E FY14E FY15ERatio And Valuation FY11A FY12A FY13E FY14E FY15E
Adjusted EPS (Rs.) 115 104 119 132 146Adjusted EPS (Rs.) 115 104 119 132 146Adjusted EPS (Rs.) 115 104 119 132 146
Adjusted PE (x) 14 14 12 11 10Adjusted PE (x) 14 14 12 11 10
PCE(x) 120 109 124 137 152PCE(x) 120 109 124 137 152PCE(x) 120 109 124 137 152
Price / Book Value(x) 9.4 7.1 5.7 4.8 4.1Price / Book Value(x) 9.4 7.1 5.7 4.8 4.1
Dividend Yield(%) 2.5% 3.1% 4.0% 4.8% 5.6%Dividend Yield(%) 2.5% 3.1% 4.0% 4.8% 5.6%Dividend Yield(%) 2.5% 3.1% 4.0% 4.8% 5.6%
EV/Net Sales(x) 2.8 2.2 2.0 1.8 1.6EV/Net Sales(x) 2.8 2.2 2.0 1.8 1.6
EV/EBITDA(x) 12.4 9.6 9.8 9.7 9.5EV/EBITDA(x) 12.4 9.6 9.8 9.7 9.5
EV/EBIT(x) 10.6 10.2 8.8 7.7 6.7EV/EBIT(x) 10.6 10.2 8.8 7.7 6.7
EV/CE(x) 10.8 8.3 8.0 7.1 6.2EV/CE(x) 10.8 8.3 8.0 7.1 6.2
M Cap / Sales 2.7 2.1 1.9 1.7 1.5M Cap / Sales 2.7 2.1 1.9 1.7 1.5M Cap / Sales 2.7 2.1 1.9 1.7 1.5
ROA (%) 54.2% 43.6% 47.5% 49.5% 52.3%ROA (%) 54.2% 43.6% 47.5% 49.5% 52.3%
ROE (%) 85.2% 54.9% 50.7% 46.5% 44.0%ROE (%) 85.2% 54.9% 50.7% 46.5% 44.0%ROE (%) 85.2% 54.9% 50.7% 46.5% 44.0%
ROCE (%) 76.7% 87.1% 91.5% 95.8% 96.9%ROCE (%) 76.7% 87.1% 91.5% 95.8% 96.9%
Asset Turnover(x) 11.69 13.82 14.77 17.41 20.76Asset Turnover(x) 11.69 13.82 14.77 17.41 20.76Asset Turnover(x) 11.69 13.82 14.77 17.41 20.76
Inventory Turnover(x) 31.67 30.18 32.06 32.16 32.16Inventory Turnover(x) 31.67 30.18 32.06 32.16 32.16
CEPS (Rs) 64 54 127 120 109CEPS (Rs) 64 54 127 120 109CEPS (Rs) 64 54 127 120 109
DPS (Rs) 40 45 59 71 83DPS (Rs) 40 45 59 71 83
Dividend Pay Out Ratio(%) 35% 43% 50% 54% 57%Dividend Pay Out Ratio(%) 35% 43% 50% 54% 57%Dividend Pay Out Ratio(%) 35% 43% 50% 54% 57%
Sales Growth (%) 43.0% 18.1% 10.2% 11.2% 11.2%Sales Growth (%) 43.0% 18.1% 10.2% 11.2% 11.2%
EBITDA Growth(%) 38.0% 15.5% 10.4% 10.8% 10.7%EBITDA Growth(%) 38.0% 15.5% 10.4% 10.8% 10.7%
PAT Growth(%) 96.0% -10.1% 14.3% 11.1% 11.1%PAT Growth(%) 96.0% -10.1% 14.3% 11.1% 11.1%PAT Growth(%) 96.0% -10.1% 14.3% 11.1% 11.1%
Gross Profit Margin (%) 20.0% 20.1% 19.6% 19.7% 19.7%Gross Profit Margin (%) 20.0% 20.1% 19.6% 19.7% 19.7%
Operating Profit Margin (%) 17.5% 17.4% 17.3% 17.4% 17.4%Operating Profit Margin (%) 17.5% 17.4% 17.3% 17.4% 17.4%Operating Profit Margin (%) 17.5% 17.4% 17.3% 17.4% 17.4%
EBITDA Margin(%) 21.6% 21.1% 21.2% 21.1% 21.0%EBITDA Margin(%) 21.6% 21.1% 21.2% 21.1% 21.0%
Net Profit Margin (%) 19.3% 14.7% 15.2% 15.2% 15.2%Net Profit Margin (%) 19.3% 14.7% 15.2% 15.2% 15.2%Net Profit Margin (%) 19.3% 14.7% 15.2% 15.2% 15.2%

4. ValuationsValuationsValuations
At CMP of 1475 the stock is trading at 12.44x and 11.19x its estimatedAt CMP of 1475 the stock is trading at 12.44x and 11.19x its estimatedAt CMP of 1475 the stock is trading at 12.44x and 11.19x its estimated
FY14E representing a potential upside of 19.45%, target priceFY14E representing a potential upside of 19.45%, target priceFY14E representing a potential upside of 19.45%, target price
months. While the two wheeler industry expected to sustainmonths. While the two wheeler industry expected to sustainmonths. While the two wheeler industry expected to sustain
term, we expect Bajaj Auto to grow faster than the industry.term, we expect Bajaj Auto to grow faster than the industry.term, we expect Bajaj Auto to grow faster than the industry.
Exhibit 2 : ValuationExhibit 2 : Valuation
Particulars FY13E ParticularsParticulars FY13E ParticularsParticulars FY13E Particulars
WACC 12.50% Net DebtWACC 12.50% Net Debt
Terminal growth rate 4.5% Equity ValueTerminal growth rate 4.5% Equity Value
Terminal Value 69161 On Of sharesTerminal Value 69161 On Of sharesTerminal Value 69161 On Of shares
PV of TV 38379 TP FY13EPV of TV 38379 TP FY13E
PV of FCFF 14798 CMPPV of FCFF 14798 CMPPV of FCFF 14798 CMP
Enterprise value 53178 Premium/DiscountEnterprise value 53178 Premium/DiscountEnterprise value 53178 Premium/Discount
Source: Perception Research & AdvisorySource: Perception Research & Advisory
Exhibit 3 : Price sensitivityExhibit 3 : Price sensitivityExhibit 3 : Price sensitivity
WACCWACC
1825 11.00% 11.50% 12.00% 12.50%1825 11.00% 11.50% 12.00% 12.50%
2.5% 1829 2088 2245 22452.5% 1829 2088 2245 22452.5% 1829 2088 2245 2245
3.0% 1617 1810 1924 19243.0% 1617 1810 1924 1924
3.5% 1507 1671 1766 1766
rate
3.5% 1507 1671 1766 1766
rate
3.5% 1507 1671 1766 1766
4.0% 1459 1611 1699 1699
Growthrate
4.0% 1459 1611 1699 1699
Growth
4.0% 1459 1611 1699 1699
4.5% 1459 1611 1699 1699
Growth
4.5% 1459 1611 1699 1699
5.0% 1507 1671 1766 1766
Growth
5.0% 1507 1671 1766 1766
Growth
5.0% 1507 1671 1766 1766
5.5% 1617 1810 1924 1924
Growth
5.5% 1617 1810 1924 19245.5% 1617 1810 1924 1924
6.0% 1829 2088 2245 22456.0% 1829 2088 2245 2245
6.5% 2266 2693 2972 29726.5% 2266 2693 2972 29726.5% 2266 2693 2972 2972
Source: Perception Research & AdvisorySource: Perception Research & AdvisorySource: Perception Research & Advisory
estimated earnings for FY13E &estimated earnings for FY13E &estimated earnings for FY13E &
price of 1825 over a period of 12price of 1825 over a period of 12price of 1825 over a period of 12
its growth over the mediumits growth over the mediumits growth over the medium
FY13EFY13EFY13E
-366.40-366.40
5281152811
292929
18251825
147514751475
Premium/Discount 19.45%Premium/Discount 19.45%Premium/Discount 19.45%
13.00% 13.50% 14.00%13.00% 13.50% 14.00%
2088 1829 15392088 1829 15392088 1829 1539
1810 1617 13901810 1617 1390
1671 1507 13111671 1507 13111671 1507 1311
1611 1459 12761611 1459 12761611 1459 1276
1611 1459 12761611 1459 1276
1671 1507 13111671 1507 13111671 1507 1311
1810 1617 13901810 1617 13901810 1617 1390
2088 1829 15392088 1829 1539
2693 2266 18252693 2266 18252693 2266 1825

5. Investment Criteria & DisclaimerInvestment Criteria & DisclaimerInvestment Criteria & Disclaimer
Rating Low RiskRating Low RiskRating Low Risk
Buy Over 15 %Buy Over 15 %
Accumulate 10 % to 15 %Accumulate 10 % to 15 %
Hold 0% to 10 %Hold 0% to 10 %Hold 0% to 10 %
Sell Negative Returns Negative ReturnsSell Negative Returns Negative Returns
Risk Description Predictability of Earnings / Dividends / Price VolatilityRisk Description Predictability of Earnings / Dividends / Price VolatilityRisk Description Predictability of Earnings / Dividends / Price Volatility
Low RiskLow Risk
Medium RiskMedium RiskMedium Risk
High RiskHigh Risk
Analyst DetailsAnalyst DetailsAnalyst Details
Pushkaraj JamsandekarPushkaraj Jamsandekar
MMS - FinanceMMS - FinanceMMS - Finance
Contact - +09869139507Contact - +09869139507Contact - +09869139507
Email ID - pushkarajjamsandekar@yahoo.comEmail ID - pushkarajjamsandekar@yahoo.com
Perception Research & AdvisoryPerception Research & AdvisoryPerception Research & Advisory
DisclaimerDisclaimerDisclaimer
This document is for private circulation and information purposes onlyThis document is for private circulation and information purposes onlyThis document is for private circulation and information purposes only
taxation or legal advice. Investors should seek financial advice regarding thetaxation or legal advice. Investors should seek financial advice regarding the
investment strategies discussed or recommended in this publication andinvestment strategies discussed or recommended in this publication andinvestment strategies discussed or recommended in this publication and
future prospects may not be realized. In no circumstances it be used or consideredfuture prospects may not be realized. In no circumstances it be used or considered
offer to buy or sell the securities mentioned in it. We and our affiliates, officers,offer to buy or sell the securities mentioned in it. We and our affiliates, officers,offer to buy or sell the securities mentioned in it. We and our affiliates, officers,
involved in the preparation or issuance of this material may: (a) from time toinvolved in the preparation or issuance of this material may: (a) from time to
sell the securities thereof, of company(ies) mentioned herein or (b) besell the securities thereof, of company(ies) mentioned herein or (b) besell the securities thereof, of company(ies) mentioned herein or (b) be
securities and earn brokerage or other compensation or act as a marketsecurities and earn brokerage or other compensation or act as a marketsecurities and earn brokerage or other compensation or act as a market
company(ies) dis-cussed herein or act as an advisor or lender or borrower tocompany(ies) dis-cussed herein or act as an advisor or lender or borrower to
interest with respect to any recommendation and re-lated informationinterest with respect to any recommendation and re-lated informationinterest with respect to any recommendation and re-lated information
publication may have been taken from trade and statistical services and otherpublication may have been taken from trade and statistical services and other
does not guarantee that such information is accurate or complete and it shoulddoes not guarantee that such information is accurate or complete and it shoulddoes not guarantee that such information is accurate or complete and it should
pressed reflects judgments at this date and are subject to change withoutpressed reflects judgments at this date and are subject to change without
investment can be substantial. You should carefully consider whether tradinginvestment can be substantial. You should carefully consider whether tradinginvestment can be substantial. You should carefully consider whether trading
your experience, objectives, financial resources and other relevant circumstancesyour experience, objectives, financial resources and other relevant circumstances
Perception Research & AdvisoryPerception Research & Advisory
Medium Risk High RiskMedium Risk High RiskMedium Risk High Risk
Over 20% Over 25%Over 20% Over 25%
15% to 20% 20% to 25%15% to 20% 20% to 25%
0% to 15% 0% to 20%0% to 15% 0% to 20%0% to 15% 0% to 20%
Negative Returns Negative ReturnsNegative Returns Negative Returns
Predictability of Earnings / Dividends / Price VolatilityPredictability of Earnings / Dividends / Price VolatilityPredictability of Earnings / Dividends / Price Volatility
High predictability / Low volatilityHigh predictability / Low volatility
Moderate predictability / volatilityModerate predictability / volatilityModerate predictability / volatility
Low predictability / High volatilityLow predictability / High volatility
and should not be regarded as an investment,and should not be regarded as an investment,and should not be regarded as an investment,
the appropriateness of investing in any securities orthe appropriateness of investing in any securities or
and should under-stand that statements regardingand should under-stand that statements regardingand should under-stand that statements regarding
considered as an offer to sale or a solicitation of anyconsidered as an offer to sale or a solicitation of any
officers, directors and employees including personsofficers, directors and employees including personsofficers, directors and employees including persons
to time, have long or short positions in, and buy orto time, have long or short positions in, and buy or
engaged in any other transaction involving suchengaged in any other transaction involving suchengaged in any other transaction involving such
market maker in the financial instruments of themarket maker in the financial instruments of themarket maker in the financial instruments of the
to such company or have other potential conflict ofto such company or have other potential conflict of
and opinions. The information contained in thisand opinions. The information contained in thisand opinions. The information contained in this
other sources, which we believe are reliable. Weother sources, which we believe are reliable. We
should not be relied upon as such. Any opinion ex-should not be relied upon as such. Any opinion ex-should not be relied upon as such. Any opinion ex-
without notice. Caution: Risk of loss in trading &without notice. Caution: Risk of loss in trading &
trading & investment is appropriate for you in light oftrading & investment is appropriate for you in light oftrading & investment is appropriate for you in light of
circumstances.circumstances.