INDEX

Page No.
Chapter No. Name of Chapter

I Introduction 01

II Company Profile 13

III Literature Review 22

Research Methodology 26
 Problem Statement
 Need of the Study
IV
 Objectives of Study
 Hypotheses of Study
 Limitations of Study

V Data Analysis & Interpretation 36

VI Findings & Suggestions 46

VII Conclusion 49

VIII References 51

IX Annexure 53
 CHAPTER 1
INTRODUCTION

1
 INTRODUCTION

WHAT IS FINANCE?

Finance involves borrowing & lending, investing, raising capital, and selling & trading securities.
The purpose of these pursuits is to allow companies and individuals to fund certain activities or
projects today, to be repaid in the future based on income streams generated from those activities.
Finance is defined as the management of money and includes activities such as investing,
borrowing, lending, budgeting, saving, and forecasting.
Finance is a term for matters regarding the management, creation, and study of money and
investments. It involves the use of credit and debt, securities, and investment to finance current
projects using future income flows. Because of this temporal aspect, finance is closely linked to
the time value of money, interest rates, and other related topics.

Finance can be broadly divided into three categories:

 Public finance
 Corporate finance
 Personal finance

There are many other specific categories, such as behavioral finance, which seeks to identify the
cognitive (e.g., emotional, social, and psychological) reasons behind financial decisions.

KEY TAKEAWAYS

 Finance is a term broadly describing the study and system of money, investments, and
other financial instruments.
 Finance can be divided broadly into three distinct categories: public finance,
corporate finance, and personal finance.
 More recent subcategories of finance include social finance and behavioral finance.
 The history of finance and financial activities dates back to the dawn of civilization.
 While it has roots in scientific fields, such as statistics, economics, and mathematics,
finance also includes nonscientific elements that liken it to an art.

2
WHAT IS FINANCIAL ANALYSIS ?

Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-
related transactions to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a
monetary investment.

KEY TAKEAWAYS

 If conducted internally, financial analysis can help fund managers make future
business decisions or review historical trends for past successes.
 If conducted externally, financial analysis can help investors choose the best
possible investment opportunities.
 Fundamental analysis and technical analysis are the two main types of financial analysis.
 Fundamental analysis uses ratios and financial statement data to determine the
intrinsic value of a security.
 Technical analysis assumes a security's value is already determined by its price, and
it focuses instead on trends in value over time.

Financial analysis is used to evaluate economic trends, set financial policy, build long-term
plans for business activity, and identify projects or companies for investment. This is done
through the synthesis of financial numbers and data. A financial analyst will thoroughly
examine a company's financial statements—the income statement, balance sheet, and cash flow
statement. Financial analysis can be conducted in both corporate finance and investment finance
settings.

One of the most common ways to analyze financial data is to calculate ratios from the data in the
financial statements to compare against those of other companies or against the company's own
historical performance.

For example, return on assets (ROA) is a common ratio used to determine how efficient a company
is at using its assets and as a measure of profitability. This ratio could be calculated for several
companies in the same industry and compared to one another as part of a larger analysis.

3


4
WHAT IS FUNDAMENTALS ANALYSIS ?

In accounting and finance, fundamental analysis is a method of assessing the intrinsic value of a security by
analyzing various macroeconomic and microeconomic factors. The ultimate goal of fundamental analysis is to
quantify the intrinsic value of a security. The security’s intrinsic value can then be compared to its current market
price to help with investment decisions.

Unlike technical analysis that concentrates on forecasting a security’s price movements,

fundamental analysis aims to determine the “correct price” (true value) of a security. By knowing
the right price, an investor can make an informed investment decision. A security can be overvalued,
undervalued, or fairly valued.

Components of Fundamental Analysis

Fundamental analysis consists of three main parts:

1. Economic analysis
2. Industry analysis
3. Company analysis

Fundamental analysis is an extremely comprehensive approach that requires a deep knowledge of

accounting, finance, and economics. For instance, fundamental analysis requires the ability to
read financial statements, an understanding of macroeconomic factors, and knowledge of
valuation techniques. It primarily relies on public data, such as a company’s historical earnings
and profit margins, to project future growth.

5
TYPES OF FUNDAMENTAL ANALYSIS

Quantitative and Qualitative Fundamental Analysis

The problem with defining the word fundamentals is that it can cover anything related to the
economic well-being of a company. They include numbers like revenue and profit, but they can
also include anything from a company's market share to the quality of its management.

The various fundamental factors can be grouped into two categories: quantitative and qualitative.
The financial meaning of these terms isn't much different from well-known definitions:

 Quantitative: information that can be shown using numbers, figures, ratios, or formulas
 Qualitative: rather than a quantity of something, it is its quality, standard, or nature

In this context, quantitative fundamentals are hard numbers. They are the measurable characteristics
of a business. That's why the biggest source of quantitative data is financial statements. Revenue,
profit, assets, and more can be accurately measured.

The qualitative fundamentals are less tangible. They might include the quality of a company's key
+-executives, brand-name recognition, patents, and proprietary technology.

Neither qualitative nor quantitative analysis is inherently better. Many analysts consider them
together.

6
WHAT IS RATIO ANALYSIS ?

Ratio analysis is a quantitative procedure of obtaining a look into a firm's functional efficiency,
liquidity, revenues, and profitability by analyzing its financial records and statements. Ratio
analysis is a very important factor that will help in doing an analysis of the fundamentals of equity.
Ratio analysis helps people analyze financial factors like profitability, liquidity and efficiency.
Ratio analysis helps financial professionals understand company trends and perform competitive
analysis. Common ratio analysis includes liquidity, leverage, market value and efficiency ratio.

HOW TO CALCULATE RATIO ANALYSIS?

It helps in determining how efficiently a firm or an organization is operating. It provides

significant information to users of accounting information regarding the performance of the
business. It helps in comparison of two or more firms. It helps in determining both liquidity and
long-term solvency of the firm.

7
HOW MANY TYPES OF RATIO ANALYSIS?

Profitability ratios, solvency ratios, liquidity ratios, turnover ratios, and earnings ratios
are five types of ratio analysis. Financial analysis in companies can benefit from various types
of ratio analysis. Top management can use it as a crucial tool for strategic business planning.

8
TYPES OF RATIO ANALYSIS

Liquidity Ratios

Liquidity ratios measure a company's ability to pay off its short-term debts as they become due,
using the company's current or quick assets. Liquidity ratios include the current ratio, quick ratio,
and working capital ratio.

 Current Ratio:
The current ratio is one of the important ratios to measure liquidity position. The ideal
ratio of the current ratio. The result will come to two and more than two means it short
term liquidity position is strong.
The formula for calculating the current ratio was = Current Assets / Current
Liabilities Current Assets included cash balance in hand, bank account balance, bills
receivable, inventories, and prepaid expenses.
Current liabilities included bills payable, outstanding expenses, and other short-
term obligations.

 Quick Ratio

The quick ratio helps to measure the Company’s ability to pay its immediate liabilities without
the sale of its stocks. It is a more conservative measure when compared to the current ratio. The
ideal norm of the quick ratio.
The formula for calculating the quick ratio was = Quick Assets/ Quick Liabilities
Quick assets include all current assets except inventories and prepaid expenses, Quick liabilities
include all current liabilities except bank over draft

 Cash Ratio
The cash ratio indicates to creditors, analysts, and investors the percentage of a company's current
liabilities that cash and cash equivalents will cover. A ratio above 1 means that a company will be
able to pay off its current liabilities with cash and cash equivalents, and have funds left over.

8
Solvency Ratios

Also called financial leverage ratios, solvency ratios compare a company's debt levels with its assets, equity, and
earnings, to evaluate the likelihood of a company staying afloat over the long haul, by paying off its long-term
debt as well as the interest on its debt. Examples of solvency ratios include: debt-equity ratios, debt-assets ratios,
and interest coverage ratios.

 Debt Equity Ratio

The debt-to-equity ratio (D/E ratio) depicts how much debt a company has compared to its assets.
It is calculated by dividing a company's total debt by total shareholder equity. Note a higher debt-
to- equity ratio states the company may have a more difficult time covering its liabilities.

 Debt Assets Ratio

The total debt-to-total assets ratio is calculated by dividing a company's total debt by its total assets.
This ratio shows the degree to which a company has used debt to finance its assets. The calculation
considers all of the company's debt, not just loans and bonds payable, and all assets, including
intangibles.

 Debt Service Coverage ratio

The debt-service coverage ratio (DSCR) measures a firm's available cash flow to pay current debt
obligations. The DSCR shows investors and lenders whether a company has enough income to pay
its debts. The ratio is calculated by dividing net operating income by debt service, including
principal and interest.

9
Profitability Ratios

These ratios convey how well a company can generate profits from its operations. Profit margin, return on assets,
return on equity, return on capital employed, and gross margin ratios are all examples of profitability ratios.

 Gross Profit Ratio

The gross profit ratio (GP ratio) is a financial ratio that measures the profitability of a company by
dividing its gross profit by net sales. The gross profit ratio is a percentage-based metric that shows
how efficiently a company generates profit from its core business operations.

 Net Profit Ratio

The net profit ratio is a measure of profitability where the post-tax net earnings of a company are
expressed as a proportion of its total revenue. The profitability ratio is frequently used
interchangeably with the term “net profit margin” or “net margin” for short.

 Operating Profit Ratio

Operating Profit Ratio is referred to as the ratio that is used to define a relationship between the
operating profit and the net sales. Operating profit is also known as Earnings before interest and
taxes (EBIT) and net sales can also be defined as the revenue that is earned from the operations.

10
Turnover Ratio

. A turnover ratio in business is a measurement of the firm's efficiency. It is calculated by

dividing annual income by annual liability. It can be applied to the cost of inventory or any other
business cost. Unlike in investing, a high turnover ratio in business is almost always a good sign.

 Fixed Assets Turnover Ratio

The fixed asset turnover ratio reveals how efficient a company is at generating sales from its
existing fixed assets. The fixed asset turnover ratio is calculated by dividing net sales by the average
balance in fixed assets. A higher ratio implies that management is using its fixed assets more
effectively.

 Working Capital Turnover Ratio

The working capital turnover ratio is a financial ratio that helps companies understand their
efficiency in using their working capital to generate sales. It is calculated by dividing net sales by
average working capital.

 Payable Turnover Ratio

Accounting professionals calculate accounts payable turnover ratios by dividing a business' total
purchases by its average accounts payable balance during the same period. The AP Turnover Ratio
measures the frequency with which a business settles its debts to suppliers within a defined
timeframe.1

11
Earnings Ratio

Price to Earnings Ratio or Price to Earnings Multiple is the ratio of share price of a stock to its
earnings per share (EPS). PE ratio is one of the most popular valuation metrics of stocks. It
provides indication whether a stock at its current market price is expensive or cheap.

 Dividend Payout Ratio

Dividend payout ratio refers to a financial metric that measures the percentage of a company's
earnings paid out to shareholders as dividend. This ratio is calculated by dividing the total amount
of dividends paid by the company by its net income for a given period.

 Dividend Yield Ratio

The dividend yield ratio is calculated using the following formula: Dividend Yield Ratio =
Dividend Per Share/Market Value Per Share. In the simplest form of calculation, you can take the
amount of dividend per share and divide it with the market value per share to get the dividend yield
ratio.

 Earnings Per Share

Earnings per share (EPS) is a company's net income subtracted by preferred dividends and then
divided by the number of common shares it has outstanding. EPS indicates how much money a
company makes for each share of its stock and is a widely used metric for estimating corporate
value.

12
 CHAPTER 2
COMPANY PROFILE

13
COMPANY PROFILE

BAJAJ Auto Limited, a flagship company of the Bajaj Group, was incorporated under the
Companies Act, 1956, with registered office at Mumbai – Pune Road, Makurdi, Pune – 411
035.

Manufacturing facilities are located at Chakan near Pune, Waluj near Aurangabad, and at
Pant Nagar in Uttarakhand. In the fiscal 2022-2023, the Company recorded landmark sales of
over five million vehicles clocking the highest ever (1) turnover of Rs. 37,609 crores and (2)
consolidated profit after tax of Rs.6,060 crores. The Company is India’s largest exporter of
motorcycles, three wheelers and quadricycles, with over two million-unit sales to 79 countries
in 2018-2019.

The Company presently holds 47.99% of KTM AG of Austria, through its 100% subsidiary
Bajaj Auto International Holdings BV Netherlands. KTM AG achieved highest ever sales of
261,529 units in the last fiscal (CY18) out of which 100,000 motorcycles were manufactured
at Chakan Plant.

The Company with an in-house, Govt. recognized R & D Centre has introduced Domineer,
Pulsar, Discover, Boxer, Platina motorcycles, RE, Maxima three wheelers, Quote
quadricycles and patented technologies – DTS-I and Exhausted.

The Economic Times has conferred “Company of the Year” award to the Company in the
year (2010-11).

14
ABOUT BAJAJ ATUO

Bajaj auto ltd is one of the foremost automobile companies in the automobile industry in India. It produced
more two-wheelers and three-wheelers in a year and also had tremendous goodwill among the Customers.
And another investor’s point of view it had a strong and positive mindset. And therefore, a New study about
its financial performance is necessary to attract new investors and easy to make Additional on Bajaj Auto ltd
by existing investors. The present study will be focused on the analysis of the financial performance of Bajaj
auto ltd from 2020-2022. In this regard liquidity ratio, Profitability Ratio, Solvency ratio, Turnover ratio, and
Earning ratio were used in the study for accurate results and to Decide based upon these results. Keywords:
Automobile Industry, Investment, Financial Performance, Bajaj Auto and Ratio Analysis.
The contribution of the automobile industry to Indian economic development is very high. In India’s GDP,
automobile industry involvement is prominent. And also, India is a developing country and Its nature and
environment are more suitable for starting a new business. So, that year by year the Number of manufacturing
and other industries increased. Bajaj Auto Limited, Marathi Suzuki, Hyundai, Tata Motors, Mahindra and
Mahindra, Honda Motor Company, and Ashok Leyland are the leading Automobile companies doing
automobile business in India.
Our study is conducted on Bajaj Auto Limited Over a century ago; a philanthropist instinctively took the
unprecedented step of using business to serve society. Shri Jamaal Bajaj was the founder of the Bajaj Group.
He strongly believed that, “common good was more important than individual gain”. His philosophy which
has stood the test of time, Bajaj Auto is one of the largest motorcycles company in the world and is the global
leader within the tuk-tuk segment. During the 2023 an amazing domestic performance boomed the global
sales at the new record consolidating the Bajaj rule of fourth largest manufacturer, after Honda, Hero and
Yamaha However, not all is perfect and this giant in India is not able to compete outside, apart the African
continent, were the demand is for cheap vehicles and consumers are considering Hero as an alternative to
Chinese manufactured products.

In the last decade years, Bajaj global 2-wheeler sales did not improve substantially. Starting from
3.4 million sales in 2012, the company lost terrain in the domestic market when Hero and Honda
divorced increasing the domestic competition. and Bajaj peaked a minimum of 2.8 million in 2015.

Following the Indian market growth, Bajaj recovered and in 2018 hit the record sales at 3.5
million. When in 2019 Indian market fell down, Bajaj followed the trend and the arrival of Coved 19
in the following year, further reduced the global volume, declined at 3.0 million in 2020.
15
Since early 2021 a recovery is in place and in 2023 the company accelerated in the hitting the new
all-time record with 3.6 million sales (+11.8%), driven by a domestic +23.8% impressive
performance.

However, outside of India sales are not improving or are declining. Preliminary data on Africa is
negative (-1.3%) and sales declined in LATAM by 5.8%.

BAJAJ AUTO HERITAGE

Bajaj Auto is an Indian brand specialized on manufacturing two-wheeler and three-wheeler,

headquartered in Pune, India, world leader in the three-wheeler segment. The company name is Bajaj
Auto Limited and is one of the 25 companies of the Bajaj Group.

Bajaj Auto Limited is one of the 25 companies of the Bajaj Group (founded in 1944 by Jamaal Bajaj)
which actually has a presence in diverse businesses such as Electronics, Life Insurance, General
Insurance, financial services and other.

The company is well-known for its R&D product development process engineering and low-cost
manufacturing skills. The company is the largest exporter of two and three-wheelers in the country.

In 1959 Bajaj Auto Ltd. obtained from the Government of India the license to manufacture two-
wheelers and three-wheelers. Thanks to a partnership with the Italian Piaggio, they obtained the
licensee to manufacture in India the already famous Piaggio Vespa and started to produce the Bajaj
Vespa 150 scooter. In 1960 Bajaj became a public limited company and the plant produced the
100.0 vehicles ten years later, in the 1970, while the record of 100.000 units sold in a single
financial year was hit in the 1977. In the 1984 the company joined a partnership with the Japanese
Kawasaki (which ended only in the 2017) to develop, produce sell and assist two-wheels in the
Indian market. In the 1985 it was opened a second plant (in Waluj near Aurangabad) to support the
strong demand and already in the

following year, it was hit the milestone of half a million sales in a single financial year, becoming the
biggest 100% Indian company in the sector. That year at the scooter and rickshaw production it was
added the motorcycles line up.

In November 2007 Bajaj Auto International Holdings BV a wholly owned subsidiary company
acquired 14.51% equity stake in KTM Power Sports AG of Austria Europe’s second largest sport
motorcycle manufacturer for Rs 345 crore.

16
In 2012 Bajaj Auto tied up with Japan’s Kawasaki in Indonesia, lately extended to the Philippines.

On 8 August 2017 Bajaj Auto and Triumph Motorcycles UK announced global partnership whereby
Bajaj will gain access to the iconic Triumph brand and its great motorcycles enabling it to offer a
wider range of motorcycles within its domestic market and other international markets.

Bajaj manufactures and sells motorcycles, scooters, auto-rickshaws and cars.[21] As of 2004, Bajaj
Auto was India's largest exporter of motorcycles.[22]

Bajaj is the first Indian two-wheeler manufacturer to deliver 4-stroke commuter motorcycles with
sporty performance for the Indian market. [vague][23] Bajaj achieved this with the 150cc and 180cc
Pulsar. Motorcycles produced by Bajaj include the CT 100 Platina,[24] Discover, Pulsar, Avenger,
and Domineer. In FY 2012–13, it sold approximately 37.6 lakh (3.76 million) motorcycles which
accounted for 31% of the market share in India. Of these, approximately 24.6 lakh (2.46 million)
motorcycles (66%) were sold in India, and the remaining 34% were exported.

17
CURRENTVALUATIONS OF BAJAJ AUTO

Bajaj Auto Limited reported earnings results for the second quarter and six months ended
September 30, 2023. For the second quarter, the company reported sales was INR 105,846.7
million compared to INR 99,110.6 million a year ago. Revenue was INR 112,068.4 million
compared to INR 105,365.6 million a year ago. Net income was INR 20,200.5 million
compared to INR 17,194.4 million a year ago. Basic earnings per share from continuing
operations was INR 71.4 compared to INR 60.1 a year ago. For the six months, sales were
INR 206,401.8 million compared to INR 176,799.5 million a year ago. Revenue was INR
218,698.5 million compared to INR 188,611 million a year ago. Net income was INR
36,641.9 million compared to INR 28,827.7 million a year ago. Basic earnings per share from
continuing operations was INR 129.6 compared to INR 100.2 a year ago.
The trailing twelve-month earnings per share (EPS) of the company stands at Rs 193.1, an
improvement from the EPS of Rs 157.3 recorded last year. The price to earnings (P/E) ratio,
at the current price of Rs 3,823.3, stands at 19.8 times its trailing twelve months earnings.
The table indicates that the year 2018 net profit ratio was 15.59% then ratio decreased in the
year 2019 to 15.08%. The net profit ratio has gradually increased in 2020, 2021 and 2022 as
16.35%, 16.40% and 16.85% respectively. The company is maintaining a good position in the

net profit. Bajaj Auto Limited reported earnings results for the second quarter and six months
ended September 30, 2023. For the second quarter, the company reported sales was INR
105,846.7 million compared to INR 99,110.6 million a year ago. Revenue was INR 112,068.4
million compared to INR 105,365.6 million a year ago.

18
Rebranding from Hamada Bajaj to Distinctly Ahead Earlier Bajaj used “B” logo in a hexagon
that was known for” Hamada Bajaj” was replaced with a more attracting, stylish, vibrant,
dynamic look moving from the lower caps to upper caps which symbolize the rejuvenated Bajaj
auto ltd. The change in the logo was the ongoing change Bajaj has transformed its facilities like
manufacturing process, service and distribution network, created its benchmark in research and
development activities. When customer has changed in terms of quality and style then change in
the identity became the necessary change for the Bajaj to invite the paradigm shift in the
consumer’s perception regarding the company. Bajaj pulsar joined hands with MTV India in
the year 2009 in order to launch pulsar MTV stunt mania which was India’s first ever bike
stunt reality show. The main intention of the Bajaj to target the youth of the India and MTV.

19
BAJAJ AUTO LIMITED

Bajaj Auto limited is one of the largest two-wheeler manufacturing company in India apart from
producing two wheelers they also manufacture three wheelers. The company had started Way back
in 1945. Initially it used to import the two wheelers from outside, but from 1959 it Started
manufacturing of two wheelers in the country. By the year 1970 Bajaj Auto had rolled Out their
100,000th vehicle. Bajaj scooters and motor cycles have become an integral part of The Indian
milieu and over the years have come to represent the aspirations of modern India. Bajaj Auto also
has a technical tie up with Kawasaki heavy industries of Japan to produce the Latest motorcycles in
India which are of world class quality The Bajaj Kawasaki eliminator has Emerged straight out of the
drawing board of Kawasaki heavy industries. The core brand values Of Bajaj Auto limited includes
Learning, Innovation, Perfection, Speed and Transparency. Bajaj Auto has three manufacturing units in the
country at Makurdi, Waluj and Chakan in Maharashtra, western India, which produced 2,314,787 vehicles
in 2005-06.
The sales are Backed by a network of after sales service and maintenance work shops all over the country.
Bajaj Auto has products which cater to every segment of the Indian two-wheeler market Bajaj CT 100
Dylex offers a great value for money at the entry level. Similarly, Bajaj Discover 125 Offers the consumer
a great performance without making a big hole in the pocket.

COMAPANY HISTORY

Bajaj Auto is a major Indian automobile manufacturer. It is Indian’s 4th largest two and
three-wheeler maker. It is based in Pune, Maharashtra, with plants in Waluj near Tauranga
Kardin and Chakan, near Pune. Bajaj Auto makes motor scooters, motorcycles and the auto
rickshaw. Bajaj Auto came into existence on November 29, 1945 as M/s Bach raj Trading
Corporation Private Limited. It started off by selling imported two- and three-wheelers in
India. In 1959, it Obtained license from the Government of India to manufacture two-and
three-wheelers and it Went public in 1960. In 1970, it rolled out its 100,000th vehicle. In
1977, it managed to produce and sell 100,000 vehicles in a single financial year. In 1985, it
started producing at Waluj in Aurangabad. In 1986, it managed to produce and sell 500,000
vehicles in a single financial Year. In 1995, it rolled out its ten millionth vehicles and
produced and sold 1 million vehicles in a year.13

20
Mission:
To create value by enabling innovation, creativity, integrity and
service to community in everything we do.

Vision:
To attain a world-class excellence by demonstrating the value-added products to customers.

Achievement

Born in India. Loved by the World

the World’s Favorite Indian
With more than 18 million motorcycles sold in over 70 countries, the Bajaj brand is truly, The
World’s Favorite Indian‟. It is India’s No.1 motorcycle exporter with two out of three bikes sold
internationally carrying a Bajaj badge. The company is also the world’s largest manufacturer of
three-wheelers. Bajaj Auto is the first two-wheeler and three-wheeler company in the world to
have reached a market capitalization of INR one trillion and continues to be the world’s most
valuable two and three-wheeler company.
Bajaj is loved not only in India but 70 countries around the world.
From motorcycles to three-wheelers and now quadricycles, from Mumbai Mesto ty and Bogota
to Bengaluru, there’s a Bajaj’s

Tagline of Bajaj Auto:

21
 CHAPTER 3
LITERTURE REVIEW

22
LITERTURE REVIEW

1. Evaluating profitability performance of Bajaj Auto Ltd & Hero MotoCorp

by
using DuPont model.
Authors Name: Mahamari, P. N., &
Poma, A.A.
Year: 2019
Conclusion
They gathering to conducted a comprehensive study using DuPont analysis to evaluate the
profitability of Bajaj Auto and Hero MotoCorp. The study highlights that Bajaj Auto's strong
profit margins are attributed to
efficient cost management and significant export revenues, which generally offer higher margin
compared to domestic sales.

2. Financial Performance Analysis of Selected Automobile Companies.

SSRN Electronic Journal.
Authors Name: Kumar, R.
Year: 2018
Conclusion
They gathering to conducted a examined the profit margins and Return on Assets (ROA) of
Bajaj Auto, noting the company's
consistent profitability driven by its strategic focus on high-margin products and markets. The study
underscores the importance of Bajaj Auto's global market strategy in maintaining robust profit
levels.

3. A Study on Liquidity Analysis of Bajaj Auto Limited. Indian Journal

of Finance and Economics.
Authors Name: Singh, A., &
Sharma, N.
Year: 2020
Conclusion
analyzed the liquidity ratios of Bajaj Auto, such as the current ratio and quick ratio, and found that the
company maintains a healthy liquidity position above the industry average. This strong liquidity is credited

23
to

24
effective
working capital management and a conservative debt approach, ensuring the company's ability to
meet short-term obligations

4. Financial Health of Bajaj Auto: A Liquidity Perspective. Journal

of Financial Research.
Authors Name Verma, Anjali
Year: 2017
Conclusion
conducted a detailed assessment of Bajaj Auto's liquidity and found that the company's efficient
cash management practices contribute to its superior liquidity ratios, ensuring operational stability
and financial health even in turbulent market conditions
.
5.Debt and Interest Coverage Ratios. International Journal of
Financial Management.
Authors Name Patel, Sneha
Year: 2017
Conclusion
investigated Bajaj Auto's solvency ratios, including the debt-to-equity ratio and interest
coverage ratio.
The study revealed that Bajaj Auto has a low debt-to-equity ratio, indicating a prudent capital
structure with minimal reliance on debt financing. The high interest coverage ratio further
demonstrates the company's strong earnings capacity to cover its interest obligations.

6. Long-term Financial Stability of Bajaj Auto. Journal of Economic

Studies. Authors Name: Reddy, S.
Year: 2019
Conclusion
explored the long-term financial stability of Bajaj Auto, emphasizing its conservative use of
leverage and high interest coverage ratio. This approach has positioned the company as a
financially stable entity with a strong ability to withstand economic downturns.
7.Operational Efficiency in Bajaj Auto. Journal of Operations
Management. Authors Name: Jain, Rakesh and
Mehta, Vikram
Year: 2018
Conclusion
analyzed operational efficiency metrics such as the inventory turnover ratio and asset
25
turnover ratio. Their study highlighted Bajaj Auto's optimized inventory management practices,
leading to high inventory turnover rates and efficient asset utilization to generate revenue.

8. Asset Utilization Efficiency of Bajaj Auto. Journal of Business

and Economics.
Authors Name: Chatterjee, Anil
Year: 2019
Conclusion
examined Bajaj Auto's asset turnover ratio and noted the company's ability to
effectively use its assets to produce revenue. The study attributed this efficiency to
continuous improvements in operational processes and strategic investments in
technology and innovation.

9. Journal of Industry and Business

Research. Authors Name: Sharma, M.
Year: 2018
Conclusion
compared Bajaj Auto's financial performance with other industry players like Hero
MotoCorp. The study found that while Bajaj Auto excels in profitability and export
performance, it faces s significant competition in the domestic market, particularly from
Hero MotoCorp, which l ears in volume sales.

10. Strategic Financial Performance of Bajaj Auto in Competitive

Markets. Journal of Business Strategy.
Authors Name: Agarwal, P.
Year: 2020
Conclusion
conducted a comparative analysis using various financial metrics and concluded that Bajaj Auto'
strategic focus on high-margin international markets has helped it maintain competitive
profitability and financial stability, despite intense competition in the domestic sector.

26
 CHAPTER 4
RESESRCH METHODOLOGY

27
RESEARCH METHODOLOGY
SOURCE OF DATA

This project the research done is based the concept of Descriptive Research, as the data will be collected to
clarify the facts. The data used for the analysis and interpretation is the secondary data

secondary data is the kind of data that is collected directly from the data source without going through
any existing sources. It is mostly collected specially for a research project and may be shared publicly to
be used for other research.

28
RESEARCH DESING

29
Research design is the framework of research methods and techniques chosen by a
researcher. The design allows researchers to hone in on research methods that are suitable for
the subject matter and set up their studies up for success.
The research design use in the study is analytical research has to analysis the financial
statement which is historical data derive conclusion form it.
Analytical analysis is a type of study that entails the use of critical thinking skills as well as
the assessment of facts and relevant data for the study.
The design of a research topic explains the type of research (experimental, survey,
correlation, semi experimental, review) and also its sub-type (experimental design, research
problem, descriptive case-study).

Tools used for data analysis:

The type of research problem an organization is facing will determine the research design and
not vice-versa. The design phase of a study determines which tools to use and how they are
used. The last 4 years annual report of the company is compiled and tabulated for the purpose
of study.
The techniques used are:
• Comparative study of Balance sheet
• Comparative study of Profit and loss account for the FY 2020-23
• Trend Analysis
• Ratio Analysis
Profitability ratio.
Turnover ratio.
Solvency ratio
Current ratio.23

PERIOD OF STUDY:
The data for a period of 3 years from 2020-23 has been taken into
consideration to assess the financial strength and weaknesses of the company.

30
 PROBLEM STATEMENTS

The project titled "A Study on Financial Analysis of Bajaj Auto with Reference to
Ratio Analysis" aims to address the following problem statement:
1. Despite Bajaj Auto's prominent position in the Indian automobile industry, a
comprehensive evaluation of its financial health using ratio analysis is necessary
to provide deeper insights into its profitability, liquidity, solvency, and
operational efficiency.

2. This study seeks to identify the strengths and weaknesses in Bajaj Auto's
financial performance over recent years, offering stakeholders detailed
information to support informed decision-making and strategic planning.

31
 NEED OF THE STUDY

1. Evaluation of Financial Health:

Profitability Analysis: Assessing how profitable Bajaj Auto has been over
recent years.
Liquidity Analysis: Understanding the company's ability to meet its short-
term obligations.
Solvency Analysis: Examining the long-term sustainability and debt management of
Bajaj Auto.

Efficiency Analysis: Evaluating how effectively the company utilizes its assets and
manages its operations.

2. Investment Decisions:
Investors require comprehensive financial performance analysis to make informed decisions
about investing in Bajaj Auto.

Shareholders need to understand the return on their investment and the potential for future
growth.

3. Benchmarking:
Comparing Bajaj Auto’s performance with industry peers and competitors.

Identifying best practices and areas for improvement relative to other leading companies in the
automotive sector.

4. Strategic Planning*:
Providing insights for the company's management to aid in strategic decision-making and
future planning.

- Highlighting strengths and weaknesses in financial performance that can impact long-term
strategies.

5. Regulatory and Compliance Requirements*:

Ensuring transparency and adherence to financial reporting standards.

Fulfilling obligations to stakeholders, including regulatory bodies and financial institutions.

32
OBJECTIVE OF THE STUDY

 To evaluate the liquidity and profitability position of Bajaj auto ltd.

 To Examine the Solvency and turnover position of Bajaj auto ltd.
 To Examine the turnover ratio of Bajaj auto ltd.

33
SCOPE OF THE STUDY

The current research has a very wide and broad scope.

The scope of this report is restricted to profitability analysis, liquidity analysis, short
term financial strength analysis through working capital management, and long-term
financial strength analysis through solvency ratios analysis
The current research focuses specifically on monetary issues.
The present study did not cover non-monetary factors that could have a direct
effect on the financial output of the two-wheeler industry and selected two-wheeler
firms.
Other financial issues such as capital budgeting, the effect of social, economic, and
political conditions on the two-wheeler industry, the impact of government policies
on trade and industry, and so on are not covered in this report.

34
Hypothesis

Null Hypothesis (H0): There is no decrease in profitability ratio of Bajaj auto ltd.

Alternate Hypothesis (H0): There is decrease in profitability ratio of Bajaj auto ltd.

Null Hypothesis (H1): There is no decrease in solvency and turnover position of Bajaj auto

ltd. Alternative Hypothesis (H1): There is decrease in solvency and turnover position of Bajaj

auto ltd.

35
LIMITATION OF STUDY

Hard to Compare: It's tough to compare Bajaj Auto to other companies because they might
do things differently or be in different situations.

Data Availability and Quality: The study's findings may be limited by the availability and
quality of financial data on Bajaj Auto. Incomplete or inaccurate data could lead to biased
results or an incomplete analysis.

Time frame: The study's conclusions may only be applicable to the specific timeframe
covered by the financial data. Economic conditions, industry trends, and company strategies
can change rapidly, potentially affecting the relevance of the analysis over time.

Future Uncertainty: The study may not account for future uncertainties, such as changes
in market conditions, technology disruptions, or unforeseen events, which could impact
Bajaj Auto's financial performance in unpredictable ways.

Scope: The analysis may focus on certain aspects of financial performance, such as
profitability or liquidity, while neglecting others. This limited scope could provide an
incomplete picture of Bajaj Auto's overall financial

36
 CHAPTER 5
DATA ANALAYSIS &
INTERPRETATION

37
Data Analysis and Interpretation

Liquidity ratio:

The liquidity ratio is used to measure the liquidity position of any organization. It means
whether the financial organization is able to pay its short-term obligations.

Current Ratio:

The formula for calculating the current ratio was = Current Assets / Current Liabilities Current
Assets included cash balance in hand, bank account balance, bills receivable, inventories, and
prepaid expenses. Current liabilities included bills payable, outstanding expenses, and other short-
term obligations.

Table 1
Current Ratio

Current Assets Current Liabilities

Year Ratio (Times)
(Rs) (Rs)

2020 6,596.96 4,253.21 1.55

2021 14,175.13 5,643.21 2.51

2022 9,994.47 4,689.44 2.13

2023 8,870.41 5,198.04 1.71

38
 Ratio
3

2.5

1.5

0.5

2020 2021 2022 2023

Table 1 shows the from the overall analysis, the current ratio results are more
than the standard norm of 1 except in the years 2020 and 2023. Due to the impacts of Coved
- 19 lockdown in India. Bajaj Auto's current ratio for fiscal years ending March 2020 to
2023
averaged 1.9x. Bajaj Auto's operated at median current ratio of 1.8x from fiscal years ending
March 2020 to 2023. Looking back at the last 5 years, Bajaj Auto's current ratio peaked in March
2022 at 2.5x.

39
 Quick Ratio

The formula for calculating the quick ratio was = Quick Assets/ Quick Liabilities
Quick assets include all current assets except inventories and prepaid expenses, Quick liabilities
include all current liabilities except bank over draft

Table 2 Quick
Ratio

Year Current Assets (Rs) Current Liabilities (Rs) Ratio (Times)

2020 6,596.96 4253.21 1.30

2021 14,175.13 5643.21 2.25

2022 9,994.47 4,689.44 1.87

2023 8,870.41 5198.04 1.44

The above table 2 denotes the quick ratio of Bajaj Auto Ltd from 2020 to 2023. The ratio
decreased from 2.06 times in 2020 to 1.30 times in the year 2020 after that it increased from
1.30 times in the year 2020 to 1.44 times in the year 2023. The results of quick ratios are more
So, so the firm can easily meet its current strong and its liquidity position is too strong.

40
Profitability Ratio
Operating Profit Ratio
The operating profit ratio helps to measure the operating efficiency of the business. Operating
profit comes from the company’s regular courses of business. And it is the major source of
income.
The formula for calculating operating profit ratio = Operating profit/ Net Sales

Table 3

Operation Profile Ratio

Year Operating Total Revenue Ratio%

profit (Rs)

2020 29,918.65 31652.21 95.16

2021 27,741.08 29017.54 94.52

2022 33,144.71 34353.95 95.60

2023 36,427.60 37,609.02 95.72

From the above table, 3 clearly shows the operating profit position of the firm. The operating
profit ratios shows a constant trend. The operating profit ratio increased from 95.16 percent to
95.72 in the year 2022. It is an appreciable one. So, the company tries to increase
revenue from the operations of the business.

41
 Return on Equity Ratio

The formula for calculating Return on equity = Net Income/Shareholders' equity

Table 4
Return on Equity Ratio

Year Net Shareholder Ratio %

income equity
(Rs.) (Rs.)
2020 5,099.98 19,925.49 25.59

2021 4,554.59 25,202.26 18.07

2022 5018.17 26,668.80 18.82

2023 5,627.60 25,425.86 20.50

The above table 4 clearly explains the return on equity ratio of Bajaj Auto Ltd. The highest
return on equity ratio shown in the year 2020 was 25.59 percent. The lowest ratio shown in the
year 2020 was 18.07 percent. This ratio suddenly decreased from 25.59 percent in the year 2020
to
18.82 percent in the year 2023. Because of that the firm had increased equity shareholders fund
in their capital structure.

42
Return on Investment Ratio
The return on investment is helping to measure used to assess the efficiency or profitability
of an investment. Income from investment is not a main source of business. Investment may
be invested in other companies‟ equity shares, debenture, and another mode.
The formula for calculating Return on Investment ratio = Net Profit/ Investment ×100

Table 5
Return on Investment Ratio

Year Net Profit (Rs) Total Investment (Rs) Ratio %

2020 5,099.98 1,8195.95 28,03

2021 4554.59 22,630.95 24.40

2022 5018.17 23,818.76 23.13

2023 5,627.60 22,923.33 25.69

shows the return on investment ratio of Bajaj auto limited. This ratio increased from
23.13 percent to 28.03 percent in the year 2020 to 2023. After that, the ratio decreased from
28.03 percent to 23.23 percent in the year 2020 to 2023. It is not an appreciable factor. So, the
firm must want to concentrate on returns from investments by the way of selecting the best
investment securities when choosing investments.

43
Solvency Ratio
The solvency ratio is used to measure a firm’s ability to its long-term obligation of the business.
It includes the debt-equity ratio and proprietary ratio.

Debt- Equity Ratio

Debt- equity ratio is the important ratio to measure long-term obligations. It matches the total
liabilities with the total shareholders‟ equity fund. High debt equity shows a levered firm and
low debt-equity ratio low levered firms.
Table 6
Debt- Equity Ratio

Year Debt (Rs) Equity (Rs) Ratio (Times)

2020 125.59 19,925.49 0.006
2021 121.46 25,202.26 0.005
2022 159.07 26,668.80 0.006
2023 100.45 28,845.10 0.003

The above table shows the Debt – Equity ratio of Bajaj Auto Ltd. As per the standard norms,
the debt equity ratio. The above results are below. So, we Know the firm can
easily able paid its outsiders' funds by using its total shareholders‟ funds.

44
Proprietary Ratio
The formula for calculating proprietary ratio = Shareholders fund/
Total Asset
Table 7
Proprietary Ratio

Year Shareholder Total Assets Ratio (Times)

2020 19,925.49 24,773.30 0.80

2021 325,202.26 31,530.20 0.80

2022 26,668.80 31,921.94 0.84
2023 27,660.40 31,127.69 0.87

Ratio
3

2.5 2
1.5

0.5

0
2020202120222023

Shows the Proprietary ratio of the firm and highlights the general financial strength of
the firm. The proprietary ratio was increased from 0.80 times to 0.84 times in the year 2020 to
2023. The results of the proprietary ratios were above the standard norm. It denotes the firm has
enough assets to meet its shareholders‟ fund. So, that firm can easily compensate their equity
shareholders fund.

45
Turnover Ratio
Assets Turnover ratio
The assets turnover ratio measures how the firm utilized its total assets in that business and
how it helps to generate revenue for the business. The higher the ratio denotes the company’s
better performance.
The formula for calculating assets turnover ratio = Revenue/Total assets

Table 8
Assets Turnover ratio

Year Total Revenue (Rs) Total Assets (Rs) Ratio (Times)

2020 31,652.21 24,773.30 120.77

2021 29,017.54 31,530.20 87.98

2022 34,353.95 31,921.94 1.04

2023 37,609.02 31,127.69 1.16

46
shows the assets turnover ratio of Bajaj Auto Ltd from 2020 to 2023.
This ratio increased from 105.88 times to 120.77 times in the year 2020 to 2023. After that
results suddenly decreased from 120.77 to 87.98 due to the post-impact of Covid-19. Then the
ratio slowly increased to 103.83.

47
 CHAPTER 6

FINDINGS & SUGGESTIONS

48
FINDINGS

The study was conducted on the basis of ratio analysis of Bajaj Auto Limited. The following
were the observations from the analysis.

 The profitability ratio of Bajaj auto limited was considered to be more favorable.
 Bajaj motors have a favorable generating revenue from its assets.
 Company have got an average and yet favorable leverage ratio.
 There was no significant increase or decrease in the companies leverage ratio.
 There was a Decreased in the coverage ratio Bajaj motors ratio.

49
SUGGESTIONS

 Except 2020 & 2023, the results of the current ratios were shown above the standard Norm of
2:1. So, it is appreciable that the firm must maintain equal or above the Standard Norm in
their future periods
 The results of the operating profit ratios were no great improvement when compared to
previous years. If the firm concentrates on its operating sources means it furthermore helps the
company’s growth.
 The debt-equity ratio of the firm was too good. The firm tries to follow that same
Improvement in the future also.
 The results of the proprietary ratios were above the standard norm. It helps to the easy to Meet
its shareholders fund by its assets of the firms. So, they continue to follow this same Strategy
in the future period.
 The overall Assets turnover ratio was appreciable. In Addition, to that, the firm tries to Increase
the utilization of its resources. It creates a positive appearance among the investors.

50
 CHAPTER 7
CONCLUSION

51
CONCLUSION

Over the last decade, the two-wheeler industry has grown significantly. Increased demand in
urban and semi-urban regions, as well as a relatively low cost of ownership, are two major
factors, two - wheelers industry is growing in India. Its success is boosted by the fact that it
is the favored mode of transportation over public transportation and four-wheelers. With
increasing fuel costs, raising safety concerns, numerous road crashes, higher insurance premiums,
and speculation about the electrification of motorcycles, the industry has recently been facing
downturns and showing signs of decline. There are roadblocks to the industry's expansion.
The primary motive of this report is to analyze financial statement of the Bajaj it measures the
performance in term of assets utilization, and profitability. Also provides some suggestion to
improve the overall financial performance of the Bajaj. The secondary data is used from published
reports and journal article to study Two-wheeler Industry.

HYPOTHESIS TESTING

After Performing the study and analysis the data, it is found that “Null Hypothesis (H0) - There is
no decrease in Profitability ratio of Bajaj auto is rejected and Alternate hypothesis(H1) - There is
decrease in profitability ratio of Bajaj auto is accepted”.

Similarly, After Performing the study and analysis the data I found that Null Hypothesis There is
decrease in solvency and turnover position of Bajaj auto is or rejected and alternate
hypothesis(H1) There is decrease in solvency and turnover position is accepted.

52
CHAPTER 8

REFERENCES

53
References

https://en.wikipedia.org/wiki/Bajaj_Auto

https://en.wikipedia.org/wiki/Bajaj_Group

https://www.bajajgroup.company/core-companies/bajaj-auto-limited/

https://www.moneycontrol.com

https://www.investing.com

Books

T. S. GREWAL’S “Analysis of Financial Statement

K. R. Subramanyam “Financial Statement Analysis

54