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Bajaj Auto
Expect 15% volume growth in FY12
We expect motorcycle industry to grow 14% in FY12 and expect Bajaj Auto to
mirror industry growth.
Expect steady 15% growth in exports volumes in FY12 on increasing market share
in newer geographies (Africa, Latin America) and industry-level growth in Asian
markets such as Sri Lanka, Bangladesh, Indonesia.
Opening up of permits in Maharashtra and Karnataka will boost domestic 3W
volumes.
Margin concern overdone
We do not subscribe to the Street’s view that domestic motorcycle margins will
contract significantly.
Recent price increase fully accounts for input cost pressures.
We build in 100bp EBITDA margin decline in FY12, although we are projecting
17% earnings growth.
Stock attractively priced; volume uptick would be the catalyst
Stock has come off 25% from its peak of INR1665 and is now trading at 11.5x our
FY12 EPS of INR109.
Uptick in monthly volumes following the seasonally weak December quarter should
drive up stock price.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bajaj Auto
Expect 15% volume growth in FY12
We expect motorcycle industry to grow 14% in FY12 and expect Bajaj Auto to
mirror industry growth.
Expect steady 15% growth in exports volumes in FY12 on increasing market share
in newer geographies (Africa, Latin America) and industry-level growth in Asian
markets such as Sri Lanka, Bangladesh, Indonesia.
Opening up of permits in Maharashtra and Karnataka will boost domestic 3W
volumes.
Margin concern overdone
We do not subscribe to the Street’s view that domestic motorcycle margins will
contract significantly.
Recent price increase fully accounts for input cost pressures.
We build in 100bp EBITDA margin decline in FY12, although we are projecting
17% earnings growth.
Stock attractively priced; volume uptick would be the catalyst
Stock has come off 25% from its peak of INR1665 and is now trading at 11.5x our
FY12 EPS of INR109.
Uptick in monthly volumes following the seasonally weak December quarter should
drive up stock price.
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