Analysis & Insights

 Bajaj Auto EBDITA margin dropped below 20% for first time , possibly to capture
higher market share at expense of lower margin .

 Operating Cycle have stretched from 17 days in FY 2018 to 25 days FY2019

indicating stress in downstream supply chain due to sluggish sales .

 P/E Ratio has fallen from 22 in FY 17 to 17 in FY19 company is relatively

undervalued compared to its historical P/E of 22+.

 Fixed Assets have fallen by 20% over two years in leading to improvement in Asset
Turnover Ratio. Company is shedding it’s inefficient fixed assets

 Trade Receivables have grown by 138% over two year while Sales have increased by
only 38% , indicating credit squeeze for Auto Dealer due to NBFC crisis.

 Bajaj Auto’s Reserves and Surplus is growing it is unable to find future avenues of
growth to deploy excess cash.

 Cost of Materials consumed has grown by 52% over two years while Sales have
grown by 38% . Company is unable to pass on prices to consumers it lacks pricing
power .

 Trade Payables has grown by 69% in two years Trade Receivables has grown by
168% in two years , Company is unable to negotiate better deals with suppliers while
it’s downstream buyers are getting better deal .

 BAL receives 41% of it’s sales revenue from Export Market. It acts as cushion for
domestic sales .

 As discussed earlier it could deploy it’s Reserves and Surplus for Expansion , Merger
or Acquisition in to grow in key foreign export markets

 Deferred Tax liabilities have grown by 67 % from Rs 323 Cr in FY 2018 to Rs 542 Cr

in FY 2019 due to GST dispute .