Buy maintained on Bajaj Auto – TP Rs.1750 - Geojit BNP Paribas Financial Services Limited

The company has reported better than expected result in all parameters.

Sales at Rs.5060 crore for 3QFY12 increased 21% yoy and ahead of market estimates due to better than expected average price realization.

EBITDA margin at 21% is a positive surprise, 60 bps up yoy and 90 bps up qoq.

Even after adjusting for MTM forex hedging loss of Rs.589 million against revenue, topline and EBITDA are ahead of market expectations by 3.6% and 4.2% respectively.

Average realization per vehicle was 4% up qoq on account of price hikes, product mix change and rupee weakening.

Strong international presence of the company has helped to mitigate domestic cyclicality risk.

The management has maintained FY12 guidance of 4.4 million units of vehicles. This indicates that the

Company is likely to maintain 3Q growth momentum of 14% in 4Q as well.

For FY12-14, the company is expected to report two – wheeler volume CAGR of 12.3%, in line with domestic two wheeler industry growth.

Source : Equity Bulls

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