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Study predicts two-wheeler players zooming into Bajaj Auto's market share

A study conducted by UTI Securities on the Indian two-wheeler industry predicts a rise in the market share of the major companies in this sector barring Bajaj Auto.

Hero Honda, TVS Suzuki and LML would record an expansion in their market share on account of an increase in aggregate sales. Bajaj Auto, on the other hand, would witness a continued slippage in its market share in motorcycles and scooters on the back of market fragmentation, but losses will be limited in extent by the pick up in pace of new product launches.

The study document forecasts a decline of 3.4 per cent in the market share for motorcycles and 11.2 per cent for scooters for the company by 2000, which is expected to be 27.7 per cent and 54.5 per cent respectively.

However, the two-wheeler sales of Bajaj Auto would grow by 7.70 per cent in 1999 and 8.98 per cent in 2000. But the operating profit margin may fall from 19 per cent in 1997 to 17.04 per cent in 2000.

''The company scores highly over its rivals in terms of sustainable cost advantage, sales and distribution capability and financial strength, but lags the competition in terms of technological expertise and skills in niche marketing,'' the study says adding that Bajaj Auto will face tough competition in new products.

The study attempts to ascertain the market share, operating profit margin and aggregate sales derived from financial analysis for a three-year period from 1997 to 2000.

The document expects Hero Honda to continue to expand its market share in the motorcycle segment, though at a slower pace than in the past. It forecasts a market share of 37.2 per cent by 2000 for Hero Honda.

On TVS Suzuki, the study foresees a continued expansion in market share for motorcycles from 16.8 per cent in 1997 to 19.9 per cent in 2000. ''The four-stroke Millennium scooter is to be launched during mid-1998 and would boost the scooter market share from 4.2 per cent in 1997 to 8.9 per cent in 2000. Market share in mopeds is projected to rise from 43.5 per cent to 50.9 per cent during the period under review'', says the study.

The document further says that market share of LML is expected to increase from 24.5 per cent in the first eleven months of 1998 to 27.6 per cent in 2000. It, however, adds that the company's debt-equity ratio at 1.90 in 1997 was the highest in the two- wheeler industry.

The analysis expects Hero Honda's aggregate motorcycle sales to grow by 17.2 per cent in 1999 and 16.6 per cent in 2000, while operating profit would rise from 9.6 per cent in 1997 to 13.6 per cent in 2000.

On TVS Suzuki, the study says that aggregate two-wheeler sales would grow to 15.9 per cent in 1999 and 17.7 per cent in 2000. The operating profit margin is expected to rise by a marginal 0.70 per cent during this period.

For LML, the analysis forecasts an aggregate scooter sales growth of 12.25 per cent for the first nine months of 1998, 17 per cent in 1999 and 13 per cent in 2000 for TVS Suzuki.

UNI