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Case Code: FINC141
Case Length: 21 Pages 
Period: 2013-2018   
Pub Date: 2018
Teaching Note: Available
Organization : Bajaj Auto Limited
Industry : Two-wheeler Industry
Countries : India
Themes: Equity Valuation/Fundamental Analysis/ Company Analysis
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

EIC Framework: Company Analysis of Bajaj Auto Limited

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Bajaj Auto had come a long way since its inception and it grew significantly over time. However, the majority of the shares were still held by the Bajaj family, the promoter group of Bajaj Auto. By the end of FY17, the promoter group held a 49% stake in the company, followed by FII with a 17.15% stake (Refer to Exhibit III for shareholding pattern of the company). Experts stated that Bajaj Auto had maintained consistency and stability in leadership but it would be better if more professional faces found a place on the board of the company..

Finance Case Studies | Case Study in Management, Operations, Strategies, Business Environment, Case Studies
Finance Case Studies | Case Study in Management, Operations, Strategies, Business Environment, Case Studies
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Bajaj Auto offered various types of vehicles to satisfy the demand coming from various customers. By the end of FY17, it had three types of products – motorcycles, three-wheelers, and quadricycles. These products were available in a variety of models – from low cost entry level to premium models. (Refer to Exhibit V for detail Product Line of Bajaj Auto).The company had three manufacturing facilities to produce these vehicles. The total production capacity of these three plants was 6.06 million vehicles per annum..
By the end of FY17, Bajaj Auto was the fourth largest two-wheeler player in India with an 11.4% share in the domestic market. Its market share in executive segment two wheelers had dropped from 22% in FY13 to 7% in FY17. However, the company was able to maintain its leading position in the three-wheeler passenger carrier segment with a 59.7% share in domestic sale.
Bajaj Auto had a wide network of distributors and vehicle service centers across India. In January 2018, the company had more than 600 dealers, mostly in urban areas. It also had more than 2,665 authorized services centers all over the country. Additionally, it had 171 exclusive dealers for the three-wheeler segment. The company also had a distribution network in 50 countries around the world. , , ..
By the end of FY13, Bajaj Auto had total reserves worth Rs. 77.59 billion, which grew at a CAGR of 22.60% to Rs. 175.67 billion in FY17. Between FY13 and FY17, its total liabilities increased from Rs. 84.39 billion to Rs. 181.47 billion. Bajaj Auto’s net block (fixed assets) fell by 4.07% in FY17 to Rs. 20.25 billion from Rs. 24.48 billion in FY16. However, investments jumped by 40.37% from Rs. 110.67 billion in FY16 to Rs. 155.35 billion in FY17 as the company had increased its investments in Bonds and Debentures and Commercial Paper.
Bajaj Auto faced major competition from the top three leading players in the industry – Hero, Honda, and TVS. The company’s market share fell from 18.6% in the first quarter of FY17 to 16.1% in the same quarter in FY18. The management stated that this had happened due to BSIV implementation and the Goods and Services Tax (GST) roll-out in July 2017. In the quarter which ended in December 2017, domestic sales volume grew only by 2% over the same quarter of the previous year, whereas its peer TVS registered a 27% growth in volumes during the same period.
Bajaj Auto enjoyed a high credit rating as it had a strong presence in the domestic market and it was a leading exporter in the two-wheeler and three-wheeler segment. Additionally, Bajaj Auto enjoyed a low debt to equity ratio and had a huge amount of cash and a big bank balance, which helped the company to maintain a high credit rating...
In August 2017, Bajaj Auto announced a strategic partnership with UK-based Triumph Motorcycles Ltd. (Triumph) to develop middleweight motorcycles (250cc and 600cc), a segment dominated by Royal Enfield in India..
Rajiv was positive about the future of Bajaj Auto. He believed that sooner or later, the Indian government would allow the company to sell its quadricycles in India also. ..
Exhibit I:Monthly Share Price Movement of Various Industry Players and Indexes
Exhibit II: Consolidated Three Years Balance Sheet of Infosys
Exhibit III: Shareholding Pattern of Bajaj Auto Limited (in Percentage)
Exhibit IV: Board of Directors of Bajaj Auto as on March, 2018
Exhibit V: Product Line of Bajaj Auto
Exhibit VI: Plant-wise Production Capacity and Product Range
Exhibit VII(a): Motorcycles Sales: Domestic and Export
Exhibit VII(b): Three-Wheeler Sales: Industry and Bajaj Auto
Exhibit VIII: Consolidated Balance Sheet of Bajaj Auto Limited (Rs. in Million)
Exhibit IX: Consolidated Profit & Loss Account of Bajaj Auto Limited (in Rs. Million)
Exhibit X: Cash Flow Statement of Bajaj Auto Limited (in Rs. Million)