#NSE0056–Leading manufacturer of bikes & 3-wheelers | Bajaj Auto
Bajaj Auto, indeed a flagship company of the Bajaj Group, is a prominent player in the two-wheeler and three-wheeler manufacturing sector. Its global reach is evident from its extensive export network spanning 79 countries, including regions in Latin America, Southeast Asia, and beyond. The company’s headquarters is located in Pune, India, reflecting its Indian roots while embracing a global outlook.
An interesting facet of Bajaj Auto’s growth strategy lies in its acquisition of a significant stake in the KTM brand. Initially acquiring a 14% stake in 2007, Bajaj Auto has steadily increased its ownership and now holds a 48% stake in KTM. KTM is renowned for its production of sports and super sports two-wheelers, which aligns well with Bajaj Auto’s portfolio diversification efforts and underscores its commitment to tapping into high-performance motorcycle segments.
Bajaj Auto Ltd has a market capitalization of ₹2,46,000 Crores and a stock Price-to-Earnings (P/E) ratio of 32. This indicates that investors are willing to pay approximately 32 times the company’s earnings per share (EPS) for its stock. A higher P/E ratio typically suggests that investors are expecting higher earnings growth in the future, while a lower P/E ratio may indicate either lower growth expectations or that the stock is undervalued relative to its earnings.
Bajaj Auto’s financial health seems robust, as it is nearly debt-free. Moreover, maintaining a healthy dividend payout ratio of 53.4% suggests that Bajaj Auto is committed to rewarding its shareholders through regular dividend distributions.
The ownership distribution of Bajaj Auto’s shares indicates the following:
- Promoters: Promoters hold a significant portion of the company’s shares, accounting for 55.06% of the total ownership.
- Foreign Institutional Investors (FIIs): FIIs own approximately 14.53% of Bajaj Auto’s shares.
- Domestic Institutional Investors (DIIs): DIIs hold around 8.47% of the company’s shares.
- Public: The public, including individual retail investors, holds approximately 21.88% of Bajaj Auto’s shares.
Bajaj Auto’s FY ’24 performance reflects a remarkable achievement across various key metrics, making it a record year for the company. Here’s a summary of the notable highlights:
- Highest Ever Revenue: Bajaj Auto achieved its highest-ever revenue during FY ’24, indicating strong demand for its products and effective market execution.
- EBITDA and PAT: Both EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and Profit After Tax (PAT) reached record levels, showcasing the company’s operational efficiency and profitability.
- Free Cash Flow: The company generated its highest-ever free cash flow during FY ’24, indicating strong cash generation capabilities and potential for future investments or shareholder distributions.
- Spare Revenue: Bajaj Auto’s spare parts revenue also reached a record high, suggesting robust aftermarket demand for its products.
- Volume Growth: Bajaj Auto witnessed significant growth in various product segments, including Pulsar volumes, 3-wheeler volumes, and KTM volumes in India, reflecting strong consumer demand and market penetration.
- Q4 Performance: In the fourth quarter (Q4) of FY ’24, Bajaj Auto continued its growth trajectory with a 24% increase in volumes, a 29% growth in revenue, and a remarkable 34% expansion in EBITDA compared to the same period in the previous fiscal year.
- Close to INR 2,000 Crores PAT Milestone: While the company just missed the INR 2,000 crores PAT milestone by a small margin, its overall financial performance demonstrates a strong trajectory and highlights its resilience and adaptability in a competitive market environment.
Bajaj Auto’s business units demonstrated impressive performance across various segments during FY ’24, as evidenced by the following highlights:
- Domestic Motorcycle Business: The domestic motorcycle business unit experienced robust retail growth, outpacing other segments with a growth rate twice as high. Additionally, the company maintained a strong market share in the upper half segment of the motorcycle market, indicating its ability to cater to the preferences of discerning consumers.
- Commercial Vehicles and 3-Wheeler Business Unit: Bajaj Auto’s commercial vehicles and 3-wheeler business unit sustained a remarkable market share of 78% throughout FY ’24. This indicates the company’s dominance and continued relevance in this segment, reflecting its strong product offerings, distribution network, and customer loyalty.
- Chetak Business Unit: Despite subsidy changes affecting the electric vehicle (EV) market, Bajaj Auto’s Chetak business unit demonstrated growth and closed the year at the third position. This achievement underscores the resilience and adaptability of Bajaj Auto in navigating regulatory changes and consumer preferences within the EV segment.
The decision to infuse Bajaj Auto Credit Limited with INR 2,250 crores underscores Bajaj Auto’s commitment to strengthening its financing capabilities to support the sales of Bajaj Auto Group vehicles. This infusion, planned in a phased manner, reflects the company’s strategic initiative to enhance access to financing options for customers, thereby potentially stimulating demand for its vehicles.
Additionally, the significant market share held by Bajaj Finance Limited in retail financing of 2-wheelers and 3-wheelers further underscores the group’s dominance and expertise in the financial services sector. With a commanding 70% market share, Bajaj Finance Limited plays a pivotal role in facilitating vehicle purchases through its financing solutions, providing convenience and flexibility to customers.
Overall, these developments highlight Bajaj Auto’s holistic approach to addressing customer needs by not only offering quality vehicles but also ensuring robust financing options through strategic investments in its financial services arm. This integrated approach is aimed at enhancing the overall customer experience and driving sustainable growth for the Bajaj Auto Group.
Disclaimer-
It’s important to note that discussions like are for informational purposes only and should not be taken as specific We are not SEBI registered investment advisor. Whether analyzing a company’s financial health, examining market trends, or discussing technical chart patterns, the goal is to provide insights and perspectives that can help you make more informed decisions according to your own research and investment strategy. Always consider consulting with a financial advisor or conducting thorough personal research before making any investment decisions.
