Report from Nirmal Bang:-
19Feb2022 Nirmal Bang.pdf (407.8 KB)
Honda Activa EV
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Bajaj Auto is planning to tap the big opportunity to sell its electric scooters in the south east Asian market given that countries in the region have announced ambitious targets for conversion of ICE vehicles to electric.
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Two-wheeler EV sales cross 75,000 units in November 2022
A total of 76,163 electric two-wheelers were sold in November 2022, up from the 68,324 units retailed in October.
Ola Electric sales Nov 16000 &
Bajaj 3000
Bajaj is at 6th number
Why Bajaj is not focusing in EV
In my opinion Customers are in dilemma that whether they should wait for some time to get a good EV or buy ICE 2 wheeler now and may be postponing their replacement purchase. At least ,I am facing the same dilemma.
Who is stopping Bajaj to capture Indian Market… they should focus first on Indian Market and then internationally.
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After good results, management outlined a few potential steps for FY 2023-24 in their investor call,
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Launch of electric 3W by March / April 2023.
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Setting up of exclusive Chetak showrooms from 2023-24 onwards and compliment this with a portfolio of EVs in next 2 to 3 years. They want to make their EV business sustainability independent of govt subsidies and are taking EV business as a marathon. Expect slow and gradual pick up. Not anything aggressive.
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New Pulser launch is accepted well. KTM is going strong and Triumph launch is near but no firm dates yet on Triumph.
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Export related challenges are expected to linger on for a couple of more quarters, however no major concerns in long run. They are consolidating on their market share in major markets. But challenges to persist and might impact CY 2023 business numbers.
Overall looks like that slowly multiple levers are coming together. Haziness to persist for next two quarters. However, next three years look very positive and will determine fate of the company and of its shareholders.
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TVS is emerging leader now. I think TVS will trump others in 2 wheeler EVs. OLA has product issues.
Many people are concerned about too much cash. I thought that a growing free cash flow is always good! It’s a better measure of growth than the earning growth.
Free cash flow is not the same as free cash
Free cash flow is cash flow left over after meeting expenses and capex
Free cash if not needed is a drag on RoE
I don’t know what Bajaj doesn’t with their cash but hero invests part of it in liquid funds and short term bonds. They only earn 7% which has a corporate tax on top
Better to pay that out to shareholders if its not needed by dividends or buybacks and focus on the business. It’ll increase roe and the management can focus on business rather than how to use that money
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Thanks, now I understand that cash on balance sheet is just one part of the free cash flow and reflects the capital allocation philosophy of the management. I learned that Microsoft keeps a cash that can keep them running for one year without any income. This is like an emergency fund.
How do you find the cash on balance sheet? I am looking at Cash + Cash Equivalents and that is Rs. 690 Cr. If I compare it with their net annual profit of Rs. 6000 Cr, it’s a small amount. Am I missing something here?
What do the members think of the buyback price…10000 per share against ~7000 cmp…is the company telling us that the valuation is low, OR they think the future earnings will be more than current earnings? Based on the the run up in the last 18 odd months…I thought stock has smartly rerated, but seems froth is building…but the buyback price is making me think is the CMP cheap or overvalued.
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Not sure what company is trying to tell but I remember watching on CNBC that Ola electric has filed for IPO and it is demanding valuation around 60000 Cr. This is for loss making entity. I guess that’s why all auto stock has run up in the recent past. If someone is viewing Ola as disruptive then we also need to take into consideration that existing companies are catching up fast with sales of their electric vehicle. It is also interesting that ahead of IPO, Ola has given huge discount and bumped up its sales figure.
I would not read too much into what Ola is doing currently until is shows profits and cash…Bajaj is one of the good companies with huge amount of cash, continues to generate huge free cash flow, has mastered to run the business with low capex. Rajiv Bajaj once said business is not run by burning cash, rather by earning cash…in case of Ola it needs to be seen if it can earn cash.
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Did anyone participate in the most recent tender offer for 10k per share? My bank account still hasn’t been credited with the funds even though the tendered shares have been debited from my demat account quite some time back. Who should I contact?
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They have substantial amount of cash invested in mutual funds as well. You will also have to include that while calculating cash on books.
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Rajiv Bajaj CEO of Bajaj Auto sets target for his company’s Share value @20000.
I don’t know whether A CEO can set target for his own company’s share value.
He was quite vocal in CNBC TV too
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It will reach 20000 but not within next 10 years, the market capture phase is over. I exited this company 6-7 months back. Just look at the market cap of this company its huge now.
Three-wheeler market is dominated by EV nowadays, this company can’t run on income from Maharashtra auto union. Two-wheeler market is captured a bit but splendor is still dominant player here.
Company will grow but the bull run is over guys. IMO
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https://unionrayo.com/en/ktm-bankrupt-2024-official/
Bajaj in Race to Buy KTM
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