Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Bajaj Auto - Higher exports, premium share boost margins - ICICI Securities

Posted On: 2021-01-21 22:25:43 (Time Zone: Arizona, USA)

Bajaj Auto's (BAL) Q3FY21 operating numbers were a beat on consensus expectations at 19.4% (up 152bps YoY). BAL margin resilience was driven by i) acceleration in export business coupled with improving mix, ii) pivot towards premium models leading to better motorcycle mix (higher Puslar-125cc sales) even as it had to contend with the headwind of delayed recovery in domestic 3Ws (high profitability) segment. Management expects near term margins to be under pressure due to rising commodity costs; however, expects to manage the same via operating leverage, price increases and mix. We believe BAL's key medium-term risk remains to domestic 3-W business on account of rising adoption of e-rickshaws. The stock remains attractive at ~15x PE /4.2% FCF yield on FY23E basis. We maintain BUY.

- Key highlights of the quarter: BAL reported 16.6% growth in revenue as ASP rose 7.3% YoY to ~Rs68.2k/unit supported by product mix, price hikes. EBITDA margin expanded ~152bps YoY due to tight control as employee costs (down 100bps YoY) and other expenses (down 139bps). Gross margin contracted 87bps due to higher RM costs as commodity basket prices edge higher (more inflation in 4Q). BAL reported highest ever PAT at ~Rs15.6bn with 23% YoY growth.

- Key takeaways from earnings call: Management indicated: a) Highest ever exports (~Rs41bn); BAL sold highest ever Pulsar motorcycles with 125cc variant leading the charge (164k units), with ~85% sales from geographies where BAL enjoys leadership position; b) South Asia (ex-Sri Lanka) is back to pre-covid levels, LatAm - 80-90%, while ASEAN still lagging at ~50%; c) BAL is pivoting towards premiumisation with highest-ever sales of Pulsar (420k units) recorded in Q3 and robust demand for higher-end KTM and Husqvarna models; Pulsar 125 is driving market share higher in 125cc segment (up to 25% vis-à-vis 13% in FY20); d) financing levels have risen in Q3 to 63% albeit down YoY (70%); Bajaj Finance holds ~60% share of the financing availed; e) BAL expects RM cost rise of ~3% as share of revenue in Q4 due to higher base metal prices; company has undertaken blended price increase of ~1-1.5% till post Q2; f) Q4 would surpass Q3 in terms of exports growth as underlying demand remains strong and g) in 3W category, sales are still lagging, services have recovered to 90%; cargo 3W stood at 70% of pre-covid levels.

- Maintain BUY: BAL continues to remain strong in exports market while improving mix in motorcycle segment via product and pricing lever. On 3Ws, demand recovery in FY22 is likely to happen on account of normalisation of public transportation. We revise our earnings estimates upwards by ~11%/4%/7% for FY21E/22E/23E, respectively, and value BAL at a target multiple of 18x FY23E EPS (earlier: 17x) and maintain our BUY rating with a revised target price of Rs4,419 (earlier: Rs3,820).

Shares of BAJAJ AUTO LTD. was last trading in BSE at Rs.3735.9 as compared to the previous close of Rs. 3637.3. The total number of shares traded during the day was 54078 in over 6238 trades.

The stock hit an intraday high of Rs. 3807.75 and intraday low of 3656. The net turnover during the day was Rs. 202231331.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Wipro - Beware of integration / impairment risks! - ICICI Securities

Easy Trip Planners Ltd - IPO Review - ICICI Direct

ICICI Direct - Derivatives Weekly View (March 5): Level of 14700 remains crucial for upsides to continue...

Easy Trip Planners Ltd. - IPO - Strong Financials - Reliance Securities

Bharat Forge - Initiating Coverage - Constant evolution - HDFC Securities

Mahindra Logistics - Large-ticket deal win - ICICI Securities

Company Update - Huhtamaki India - ICICI Direct

Gladiator Stocks: IndusInd Bank, VIP Industries - ICICI Direct

Warehousing demand expected to grow around 160% to reach 35 million sq. ft in 2021: JLL

Telecom - Spectrum auction: Prudent investment by Bharti Airtel - ICICI Securities

JB Chemicals & Pharmaceuticals - Analyst meet takeaways - ICICI Securities

IPO Review - MTAR Technologies Ltd - ICICI Direct

Auto Sector - Monthly Volume Round-up - Feb 21 - Decent YoY Growth Continues

Aditya Birla Fashion and Retail - Focus on scaling up new businesses - ICICI Securities

Automobiles (wholesale) - Wholesales push continues despite modest retail trends - ICICI Securities

Aditya Birla Capital - Thoughtful (inclusive) conglomerate business evolution commands premium - ICICI Securities

Jubilant Foodworks - Buying in-the-money options - ICICI Securities

Multi Commodity Exchange of India - Play on rising commodity prices? - ICICI Securities

Gladiator Stocks - Sudarshan Chemical - ICICI Direct

Monthly Commodities Outlook - March 2021 - ICICI Direct

ICICI Direct - Monthly Currency Outlook: Rupee to depreciate further towards 75.00 level...

ICICI Direct - Covid Recovery Pulse - E-way bill generation in February 2021 starts on strong note...

Company Update - Virtual JLR Investor Event - Tata Motors - ICICI Direct

Analyst Meet Update - Aditya Birla Fashion and Retail - ICICI Direct

MTAR Technologies Ltd. - IPO - Huge Opportunities from Clean Energy Bodes Well - Reliance Research

ICICI Direct Derivatives Weekly View (February 26): Failure to move above 14700 may extend declines towards 14300...

Bank: Sector Credit Trends - Slows, Yet again - HDFC Securities

Piramal Enterprises - Pharma day highlights - ICICI Securities

Polymer price tracker - PVC prices rise sharply again! - ICICI Securities

Greenply Industries - Growth returns, at an inflection point - ICICI Securities

Tata Motors - JLR future proofing itself with rapid electric transition - ICICI Securities

Dairy - Higher freight cost and increase in Global SMP prices - ICICI Securities

Analyst Meet Update - Nestlé India (Hold): Focus on product innovation, expanding rural reach - ICICI Direct

MTAR Technologies Ltd - A strong player in booming high precision engineering... - Geojit

Rollover Report for February - March 2021 : Angel Broking

Reaction from industry experts on Q3FY21 GDP numbers

M. Govinda Rao, Chief Economic Adviser, Brickwork ratings on Q3FY21 GDP numbers

Mr. Dhiraj Relli, MD & CEO, HDFC securities views on Q3FY21 GDP Growth Number

Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research on Q3FY21 GDP

Rollover Analysis - Feb 21, 2021 - YES Securities

Consumer Durables - Demand-driven recovery continues - HDFC Securities

Cement - Demand surprises; earnings upgrade to continue - ICICI Securities

Gladiator Stocks - TeamLease Services - ICICI Direct

Gladiator Stocks - Metals to outshine post multi-year breakout... - ICICI Direct

Company Update - Sundaram Finance - ICICI Direct

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020