Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong 2Q results
Bajaj reported strong 2Q results with recurring net profit rising 17% YoY –
inline with our estimates. EBITDA margins expanded 100 bps QoQ as a
weaker rupee boosted export profitability. Margins could sustain at 20%
levels in 2H given favourable industry conditions. However, like Hero, we are
not so sanguine on these conditions sustaining beyond FY12 given our
concerns on competition and we see risks to market share and margins on a
12m view. We upgrade FY12-14 EPS by 2-5% factoring in slightly higher
volumes and margins but maintain U-PF with a revised TP of Rs1500.
Strong 2Q results; margins expand 100bps QoQ
Bajaj’s 2Q EBITDA grew a strong 18% YoY and came in 4% above estimates. A
weaker rupee boosted export ASPs and resulted in a 3.5% rise in overall ASPs on
QoQ basis. This drove a 110 bps QoQ drop in RM/Sales and resulted in EBITDA
margins expanding by 100bps QoQ. We are a bit surprised at the sharply higher
other expenditure and interest on QoQ basis and will seek clarity on this in the
conference call. Lower other income and higher interest and depreciation versus
expectations resulted in an inline recurring net profit (up 17% YoY) despite the
4% EBITDA beat. Reported net profit grew a lower 6% YoY due to Rs950m
notional MTM forex loss on Bajaj’s currency hedging contracts.
2H likely to be strong as well
The 2W industry environment remains favourable with continued strong growth
and no incremental competition. There is some risk of export volumes slipping in
2H as overseas distributors might have built up stocks ahead of the Sep-end
expiry of DEPB benefits, which would weaken product-mix. However, weakening
commodity prices, full effect of a weaker rupee and recent price hikes should
negate this and help sustain margins at 20% in 2H.
Favourable industry environment might not last into FY13; U-PF
2W industry growth has remained resilient in FY12 despite a visibly slowing
economy. We see risk of industry growth heading lower by FY12-end. Competition
from HMSI will rise sharply over FY13-14 posing risk to the market share and
margins of incumbents like Bajaj. Domestic 3W sales could even decline in FY13
as the ‘new permit’ effect fades. We also see risk of exports growth moderating on
the high base of FY12. These risks, combined with the fact that valuations at 14x
FY13 P/E are not cheap, makes us maintain our negative stance on Bajaj.
However, we would prefer Bajaj over Hero Motocorp as Bajaj has stronger product
triggers in FY13 (new Pulsar) and will face lesser incremental competition than
Hero (since HMSI will most likely target the 100cc bike space first).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong 2Q results
Bajaj reported strong 2Q results with recurring net profit rising 17% YoY –
inline with our estimates. EBITDA margins expanded 100 bps QoQ as a
weaker rupee boosted export profitability. Margins could sustain at 20%
levels in 2H given favourable industry conditions. However, like Hero, we are
not so sanguine on these conditions sustaining beyond FY12 given our
concerns on competition and we see risks to market share and margins on a
12m view. We upgrade FY12-14 EPS by 2-5% factoring in slightly higher
volumes and margins but maintain U-PF with a revised TP of Rs1500.
Strong 2Q results; margins expand 100bps QoQ
Bajaj’s 2Q EBITDA grew a strong 18% YoY and came in 4% above estimates. A
weaker rupee boosted export ASPs and resulted in a 3.5% rise in overall ASPs on
QoQ basis. This drove a 110 bps QoQ drop in RM/Sales and resulted in EBITDA
margins expanding by 100bps QoQ. We are a bit surprised at the sharply higher
other expenditure and interest on QoQ basis and will seek clarity on this in the
conference call. Lower other income and higher interest and depreciation versus
expectations resulted in an inline recurring net profit (up 17% YoY) despite the
4% EBITDA beat. Reported net profit grew a lower 6% YoY due to Rs950m
notional MTM forex loss on Bajaj’s currency hedging contracts.
2H likely to be strong as well
The 2W industry environment remains favourable with continued strong growth
and no incremental competition. There is some risk of export volumes slipping in
2H as overseas distributors might have built up stocks ahead of the Sep-end
expiry of DEPB benefits, which would weaken product-mix. However, weakening
commodity prices, full effect of a weaker rupee and recent price hikes should
negate this and help sustain margins at 20% in 2H.
Favourable industry environment might not last into FY13; U-PF
2W industry growth has remained resilient in FY12 despite a visibly slowing
economy. We see risk of industry growth heading lower by FY12-end. Competition
from HMSI will rise sharply over FY13-14 posing risk to the market share and
margins of incumbents like Bajaj. Domestic 3W sales could even decline in FY13
as the ‘new permit’ effect fades. We also see risk of exports growth moderating on
the high base of FY12. These risks, combined with the fact that valuations at 14x
FY13 P/E are not cheap, makes us maintain our negative stance on Bajaj.
However, we would prefer Bajaj over Hero Motocorp as Bajaj has stronger product
triggers in FY13 (new Pulsar) and will face lesser incremental competition than
Hero (since HMSI will most likely target the 100cc bike space first).
No comments:
Post a Comment