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Bajaj Auto
Bajaj Auto (BAL) reported slightly lower-than-expected top-line growth of 22.8% yoy
(13.7% qoq) to `4,777cr, driven by 17.7% yoy (15.3% qoq) jump in volumes. The variance
in top-line growth from our expectation was due to lower average net realisations, which
declined by 1.8% qoq despite price hikes of ~2% taken during the quarter. On a yoy
basis, however, average net realisations grew by 4.3% to `41,973. Among the product
mix, Pulsar and Discover contributed ~65% of motorcycle sales during 1QFY2012. BAL’s
export revenue recorded strong ~40% yoy growth during the quarter to `1,688cr, owing to
a 31.9% yoy increase in exports volumes. Other operating income also posted robust
24.6% yoy growth to `190cr, aiding the top-line performance.
On the operating front, EBITDA margin for 1QFY2012 came in 71bp below our estimate
at 19.1%, registering a fall of 91bp yoy (145bp qoq). This was a result of higher
raw-material costs, which increased by 150bp yoy (210bp qoq). However, lower staff cost
and other expenditure restricted further contraction in EBITDA margin to a certain extent.
Overall, operating profit during the quarter witnessed 17.2% yoy (5.7% qoq) growth to
`911cr. BAL reported marginally lower-than-expected net profit growth of 20.5% yoy (5.2%
qoq) to `711cr against our estimate of `734cr, largely because of lower-than-expected
operating performance. Further, the bottom-line performance was aided by
lower-than-expected tax outgo.
At current levels, the stock is trading at 12.9x FY2013E earnings of `110. The stock rating
is currently under review.
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