Bajaj Auto – Sustainable Ride – Closing Gap with Hero Honda
Baja Auto is estimated to record 25% growth in FY10/FY11 (industry 20%/15%), as a market transition to user-related economy and premium segments is expected to favor Bajaj’s Discover and Pulsar brands, respectively. We expect the company to sustain recent share gains in bikes, increasing to ~25%, up from the January trough of 15%, and 21% in H1.
Going forward, there will be moderation in margins to ~20% by FY12, below peak levels of 22% achieved in Q2. This is due to (1) operating leverage, (2) better sales mix in favour of pricier economy, (more…)