Rajiv Bajaj, managing director of Bajaj Auto believes that the company should not have positioned Discover as a 100cc brand. It was always positioned as a 125cc motorcycle.
Bajaj Auto has recently won a fresh order of 1.25 lakh 125cc Discover bikes from the government of Sri Lanka. The company plans to execute the order from Sri Lanka itself in 3-4 months. But the bigger news here is it won a repeat order via the Sri Lankan distributor, says Rajiv Bajaj, managing director of Bajaj Auto.
The domestic motorcycle market size currently is at nine lakh. Bajaj is targeting 2.2 lakh motorcycle sales every month. He plans to increase market share to 24 percent next year against 18 percent now, while adding that the company’s market share will rise to 24 percent in six months from now. The company is looking at 70,000 Discover motorcycle sales and 80,000 Platina unit sales per month. It is also developing two new brands which do not currently exist and introduce two products under existing brands – Platina and Pulsar.
On Discover 125cc, Bajaj says the issue was with how the company communicated or promoted the brand. It was always positioned as a 125cc motorcycle. He adds that the company should not have positioned Discover as a 100cc brand, while adding that the 150cc Discover is doing very well.
On the company’s financials, he says Bajaj Auto managed to stay in the 20 percent EBITDA zone for five years and despite its issues with the Discover brand, the company has a robust strategy. Going ahead, he does not see higher advertising and marketing spends impacting margins.
Bajaj Auto has entered 29 new markets over the last 12 months.
Bajaj Auto stock price
On December 23, 2014, at 12:50 hrs Bajaj Auto was quoting at Rs 2507.20, up Rs 34.00, or 1.37 percent. The 52-week high of the share was Rs 2690.00 and the 52-week low was Rs 1796.00.
The company’s trailing 12-month (TTM) EPS was at Rs 103.65 per share as per the quarter ended September 2014. The stock’s price-to-earnings (P/E) ratio was 24.19. The latest book value of the company is Rs 332.04 per share. At current value, the price-to-book value of the company is 7.55.