Bajaj Auto Limited

I love reading the posts written by John Huber, who runs a fantastic blog called Base Hit Investing. I highly recommend you to read his latest post on Focusing on the Investment Process. In it, he writes, “I have found (and others have too I think) that writing improves comprehension and helps you retain more information. It clarifies your thinking. Basically, a short summary might help you wring more comprehension out of a given unit of effort”. I couldn’t agree more with what he stated. This year I will be doing a detailed write up on 30 to 40 companies. And I will be sharing it with you through this blog. Here is the first one on Bajaj Auto Limited.

Advertisements

19 thoughts on “Bajaj Auto Limited

  1. Hello Jana,
    Happy new year…As a blog subscriber , each day I check my email to see if there is update from your blog. As always your writing is very crisp and informative. please keep writing and en lighting our knowledge.
    God bless you

  2. Excellent write up of Bajaj Auto Jana. Enjoyed reading it. Thank you.

    PS: Link to the second Youtube video is broken.

  3. Good compilation of data points.

    But this is kind of first level thinking. Few years back when I was studying bajaj auto I used Invert, always Invert trick. Why margins are high? Considering only domestic asked, operating mgn happen to be as high as 13% as compared to Honda and hero. 1 likely reason you pointed out superior product mix but it still doesn’t fully explain the stark difference between the two. And if you see price realization and cost per unit, it happens to be same.

    Second, I did scuttlebutt. The inventory which distributors and retailers hold at Bajaj auto are considerably lower than Hero or TV. Distributors have 7-14 days of inventory as opposed to Hero at 22/28 days. Source: ConCall Again, retailers stock more than 14-21 days of inventory at Hero as opposed to Bajaj Auto at 7 days. (Visited sites) Now since investment of distributors and retailers is low for Bajaj, he has to give them lower margins to justify adequate ROCE for them. This in a way helps increase operating margins at company level. Excellent in supply chain management. Bajaj doesn’t get scared to shut down production facilities if demand is not adequate. Hero is more traditional Indian business mentality who believes in pumping and dumping at front end.

    I developed this thought process with help of Joan Magretta value chain analysis as prescribed by Porter but not elaborated by Porter to great extent.

    Regards

    On Friday 8 January 2016, Seeking Wisdom wrote:

    > Jana Vembunarayanan posted: “I love reading the posts written by John > Huber, who runs a fantastic blog called Base Hit Investing. I highly > recommend you to read his latest post on Focusing on the Investment > Process. In it, he writes, “I have found (and others have too I think) that > w”

Comments are closed.