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Bajaj Auto Neutral
BAJA.BO, BJAUT IN
3QFY11 PAT at Rs.6.7B driven by higher other
income; EBITDA margin moderates
• 3Q PAT at Rs.6.7B (+32% yoy) was above our estimates – while the
operational performance was in line, the variance was driven by higher
other income as well as lower tax rates (-470bp yoy).
• While unit volumes were up 17% yoy; higher realisations (+8% yoy) led
to revenues of Rs.41.7B (+27% yoy) - realisations improved, given price
hikes taken by the company throughout the year.
• EBITDA margins came in at 20.3% - margins declined 160bp yoy and
40bp qoq as the raw material cost ratio increased to 71.4% (+290bp yoy
& +70bp qoq), given higher commodity costs as well as a changing
product mix.
• Other Income at Rs.993m (vs. 351m in 3QFY10) was sharply higher,
given an increasing cash surplus at the company. Investments as of
Dec’10 stood at Rs.47.6b. Tax rates were also lower at 27.3% (-470bp
yoy).
• Highlights from management comments in the media post results:
Volume outlook: Management expects FY11E volumes to come in at
3.9m units (marginally lower from the 4m target set earlier). For FY12E,
management expects to report sales growth of c.4.6-4.8m (18-23% yoy),
driven by new model launches as well as a ramp-up in the distribution
network. Margins outlook – while management expects margins to
sustain at around the 20% level, if competitive intensity in the sector
rises, the company would have to respond accordingly.
• The conference call will be held tomorrow at 4:30 pm – dial in numbers
are +9122 3065 0020/+91 22 6629 0048. We await clarity on: a) margin
outlook, b) management views on rising competition in the segment. We
reiterate our cautious outlook on the two-wheeler segment.
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