Bajaj Auto :: May 11 volumes: robust exports drive volume growth:: Deutsche bank

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Bajaj's May-2011 volumes are robust in both the two-wheeler (2W) and
three-wheeler (3W) segments. YTD 2W/3W volume have grown at 17%/
28% vs our full year FY12 estimates of 18%/14%. However, we believe
that Bajaj has underperformed its two peers (Hero Honda and TVS) in the
domestic market. 'We estimate its domestic 2W sales have grown 8-9%
YTD vs Hero Honda at 26% and TVS (Buy, INR55.6) at 14%. Its domestic
2W marketshare has also stagnated at its long term average of 27%.
We maintain our Buy rating on the stock with a target price of Rs 1,650.
Stock currently trades at 13x FY12E EPS which is a 20% discount to its peer
Hero Honda (Sell, INR1.861.25) which is trading at 16.5xFY12E EPS
Key highlights (see table below) :
* Total motorcycle volumes in May-2011 were at 317,989 (+18% YoY).
* 3W volumes were at 40,860 (36.4% YoY).
* Exports continue to be driver of growth with 126,818 units (+32% YoY)
* Hero Honda and TVS also reported their May-2011 2W volumes at
500,234 units (+14.8% YoY) and 181,891 units (+17.6% YoY) respectively.