Re: {LONGTERMINVESTORS} Bajaj Auto - Thread
RAJESH DESAI
The country’s second largest two-wheeler maker, Bajaj Auto, on Tuesday reported 15.06 per cent fall in motorcycle sales at 3,15,314 units in September.
The company had sold 3, 71, 208 units in the corresponding month last year, Bajaj Auto Ltd (BAL) said in a statement.
BAL said exports also fell by 6.12 per cent during the month at 1, 33, 222 units compared to 1, 41, 913 units in September 2011.
In the three-wheeler category, the company said its sales stood at 44,838 units against 46,478 units in the same month last year, a dip of 3.53 per cent.
Total vehicle sales of the company in the last month stood at 3, 60,152 units compared to 4, 17, 686 units in the same period a year ago, a decline of 13.77 per cent, the statement said.
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CA. Rajesh Desai
Rajesh Desai
STOCK UPDATE - Sharekhan
Bajaj Auto
Recommendation: Hold
Price target: Rs2,028
Current market price: Rs1,788
Strike at Chakan plant to hit production
Workers at Chakan plant resort to strike
The
workers at Bajaj Auto's Chakan plant resorted to a strike,
thereby impacting production. The plant employs 925
permanent workers besides 1,000 temporary and contractual workers.
The workers are demanding a wage hike of 25% and also permanent
employment for the contractual workers. Apart from this, the
workers are also demanding an option that would entitle them
to subscribe to 500 equity shares of the company at a
discounted price of Rs1 per share.
Production to be impacted in near term
The
Chakan plant produces 3,000 units/day and produces the
premium range of motorcycles Pulsar, Avenger, Ninja and KTM
brands. The Chakan plant contributes about 25% of the
overall production capacity of the company.
Out
of the striking workers about 200 employees reported to
work and the production was recommenced. However, the
production would be sub-optimal. The management estimates the
production to dip by 1,000 units/day due to the strike. It expects
the plant to produce 50,000 units/month in June 2013 and July
2013 as against the normal capacity of 75,000 units/per
month. Overall the production impact is likely to be 50,000
units.
Valuation and view: Maintain Hold but would carefully watch on developments
We
assess the production loss of 50,000 units due to the
strike. The company, however, has an inventory of four to
five weeks, which would shield from an immediate loss in
sales. However, the sales may get impacted if the strike
persists for a longer period. We are keeping our earnings
assumptions unchanged as of now. We maintain Hold recommendation on
the stock with a price target of Rs2,028. However, we would be
carefully watching developments for any deterioration in the
situation.
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CA. Rajesh Desai
Rajesh Desai
Bajaj Auto
Recommendation: Hold
Price target: Rs2,243
Current market price: Rs2,018
New products on anvil through KTM alliance
BAL to further consolidate its leadership position in premium segment through forthcoming launch of products through KTM technological support
The technological alliance with KTM would enable Bajaj Auto Ltd (BAL) to offer advanced products and maintain leadership in the premium motorcycle space. The newly launched Pulsar 200 NS with technological inputs from KTM (Duke 200) has enabled BAL to significantly upgrade its Pulsar range. Also, BAL plans to launch Pulsar 375 to further consolidate its leadership in the premium category.
The alliance with KTM (BAL holds a 47.96% stake in KTM) provides BAL access to high-end technology. KTM, in turn, leverages the cost effective manufacturing of BAL. Duke 125, Duke 200 and the recently launched Duke 375 are manufactured at BAL's Chakan plant. Duke 125 is exported to the European market whereas Duke 200 and Duke 375 are for the emerging markets including India. In 2012, BAL had produced 26,805 Duke motorcycles, contributing about 25% of the overall KTM volume.
Joint product development and platform sharing enable cost efficiency
KTM plans to move beyond its off-road niche and increase focus on street bikes. The on-road bikes currently contribute about 34% of the overall volume. KTM is focusing on low displacement engines (of up to 690cc) for the emerging markets which would be its key growth driver.
The BAL-KTM alliance is working on joint platforms to develop products. The alliance has agreement for two platforms (125cc to 200cc) and (270cc to 390cc). KTM has already launched products in the 125cc and 200cc segments while product launches are planned in the 270cc and 390cc space as well (BAL recently launched the KTM Duke 390cc). Component sharing enables cost efficiencies as the cost is spread over a larger volume base.
KTM's financial performance improves
KTM in which BAL holds a 48% stake overtook BMW to become Europe's largest bike maker, selling 107,142 units in CY2012. After registering a strong performance in CY2012, KTM improved its performance in H1CY2013.
In H1CY2013, KTM's revenues grew by 18% to 349 million euros on the back of a 10% growth in the volumes despite a difficult situation in the key markets of Europe and the USA. The operating profit margin (OPM) improved by 90 basis points to 9.9% in H1CY2013. Its profitability more than trebled to 12.3 million euros.
KTM plans to double the volumes in the next five years. An increased contribution by the on-road bikes on the back of the focus on the emerging markets is expected to be a major growth driver. About 50% of the bikes are targeted to be manufactured at BAL's Chakan plant.
Valuation
By leveraging the technology expertise of KTM, BAL is likely to maintain its leadership in the premium motorcycle space. BAL can also realise synergies by using KTM's distribution network overseas. The improved financial performance of the KTM joint venture augurs well for BAL. We keep our stand-alone earnings estimates for BAL unchanged. We assign book value of Rs42 per share to BAL's investment in KTM. We maintain our Hold recommendation on the stock with a revised price target of Rs2,243.
CA. Rajesh Desai
Rajesh Desai
Bajaj Auto partner KTM to increase production at Chakan: Sources
-3-fold increase in motorcycle production at Chakan by 2016
-KTM also eyes assembly lines in Thailand, Colombia
Alert: Bajaj Auto owns 48 percent in KTM
KTM CEO Stefan Pierer to CNBC TV18:
-Developing 2 new platforms with Bajaj Auto at Chakan
-Platforms in range of 125-250cc and 250-390cc
-Husqvarna to use common engine platform of Bajaj-KTM
-Will look at introducing Husqvarna models in 125-390cc
-Will look at producing first Husqvarna bike in 18 months
-To hike production at Chakan to 1 lakh units in 2-3 years
-To export 70 percent bikes of Chakan production
Rajiv Bajaj says
-KTM to end 2013 with sale of 1.20 lakh units
-No possibility of raising stake in KTM from current 48 percent
-KTM to launch sports model in India next year
-Will launch Duke 690 motorcycle in India by 2015
CA. Rajesh Desai