Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bajaj Auto
Neutral
BAJA.BO, BJAUT IN
4QFY11 Results - While industry growth rates are
likely to moderate, competitive intensity is rising;
Maintain Neutral
• 4Q reported PAT of Rs14.0B included an exceptional gain of Rs7.2B.
Adjusting for this, PAT came in at Rs6.8B (+20% yoy), which was
above our and consensus estimates, driven by improved profitability. 4Q
EBITDA margin came in at 20.5% (-240bp yoy but +20bp qoq), which
was led by a healthy product mix and cost control measures. Exceptional
gains of Rs7.2B included sales tax deferral incentives of Rs8.3B and an
impairment loss of Rs1B related to the Bajaj Indonesia venture.
• Management outlook in its post results call: Volume Outlook:
Management expects to grow ahead (+20% yoy) of the domestic
motorcycle industry (+14% yoy) in FY12 and also expects growth in the
export segment to remain healthy, resulting in a volume target of c.4.5m
units (vs.c.3.8m units in FY11). Margin Outlook: The company is
guiding for FY12 margins to come in at close to 20%. Management
believes that advertising/S&D spends will be contained over FY12, and
that the commodity inflationary pressures should ease in 2H FY12
which would be supportive of margins. On export incentives: While the
DEPB benefit (9% of export value) scheme is likely to expire in June,
management does not anticipate that the benefits will be phased out
immediately. The export incentives account for c.10% of Bajaj’s PBT.
Dividend Payout: The company will likely continue with its dividend
payout ratio at c.50% Capex: Management has guided for a capex of
Rs5B over FY11-13.
• Price target: We are rolling forward our PT to Sep’11. As we are
lowering our P/E multiple to 13x (from 14x earlier), our PT remains at
Rs1,400. We believe that while industry growth rates will likely
moderate from hereon, competitive intensity is rising (particularly post
the split of Hero and Honda). Bajaj has already ceded share to the
competition in 4Q. We reiterate our Neutral rating on the stock. Risks to
our PT: Key downside risks to our price target are a sharp build-up in
competitive pressures and any lowering of the DEPB benefits, while a
key upside risk is a higher-than-expected industry growth rate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bajaj Auto
Neutral
BAJA.BO, BJAUT IN
4QFY11 Results - While industry growth rates are
likely to moderate, competitive intensity is rising;
Maintain Neutral
• 4Q reported PAT of Rs14.0B included an exceptional gain of Rs7.2B.
Adjusting for this, PAT came in at Rs6.8B (+20% yoy), which was
above our and consensus estimates, driven by improved profitability. 4Q
EBITDA margin came in at 20.5% (-240bp yoy but +20bp qoq), which
was led by a healthy product mix and cost control measures. Exceptional
gains of Rs7.2B included sales tax deferral incentives of Rs8.3B and an
impairment loss of Rs1B related to the Bajaj Indonesia venture.
• Management outlook in its post results call: Volume Outlook:
Management expects to grow ahead (+20% yoy) of the domestic
motorcycle industry (+14% yoy) in FY12 and also expects growth in the
export segment to remain healthy, resulting in a volume target of c.4.5m
units (vs.c.3.8m units in FY11). Margin Outlook: The company is
guiding for FY12 margins to come in at close to 20%. Management
believes that advertising/S&D spends will be contained over FY12, and
that the commodity inflationary pressures should ease in 2H FY12
which would be supportive of margins. On export incentives: While the
DEPB benefit (9% of export value) scheme is likely to expire in June,
management does not anticipate that the benefits will be phased out
immediately. The export incentives account for c.10% of Bajaj’s PBT.
Dividend Payout: The company will likely continue with its dividend
payout ratio at c.50% Capex: Management has guided for a capex of
Rs5B over FY11-13.
• Price target: We are rolling forward our PT to Sep’11. As we are
lowering our P/E multiple to 13x (from 14x earlier), our PT remains at
Rs1,400. We believe that while industry growth rates will likely
moderate from hereon, competitive intensity is rising (particularly post
the split of Hero and Honda). Bajaj has already ceded share to the
competition in 4Q. We reiterate our Neutral rating on the stock. Risks to
our PT: Key downside risks to our price target are a sharp build-up in
competitive pressures and any lowering of the DEPB benefits, while a
key upside risk is a higher-than-expected industry growth rate.
No comments:
Post a Comment