Bajaj Auto 2QFY12 Results: First Take - Margin surprise driven by improved product mix; domestic growth moderates ::JPMorgan,

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 2QFY12 reported PAT came in at Rs.7.3B which included a MTM loss
of Rs.954m on outstanding forward contracts. Adjusting for the same,
the adj. PAT came in at Rs7.9Bn (+16%yoy), which was above street
estimates. The variance was driven by an improvement in EBITDA
margin, which came in at 20.1% (+100bp qoq) - the OEM benefited
from an improved product mix (given higher exports and increased sales
of Pulsar bikes).
 Bajaj Auto reported revenues of Rs.52.7B (+21% yoy), driven by a 16%
growth in volumes and a 4% improvement in realizations. Growth in
volumes was driven by exports (+38% YTD) while domestic growth
moderated (+7% yoy). Exports accounted for 36% of sales in the quarter.
The company continues to witness healthy sales trends in key markets
such as Africa.
 Operating margins came in at 20.1% (+100bp qoq, -60bp qoq) as the
OEM benefited from an improved product mix and price hikes taken
during the year - thus, the RM expense ratio declined -120bp qoq.
 Bajaj has provided for MTM loss of Rs.954m on account of revaluation
of range forward contracts; management highlights that this is purely a
notional loss and would get reversed on maturity of the underlying
contracts.
 We will revert with more details post discussion with management. We
await clarity regarding i) volume outlook in the export markets ii)
outlook on competitive intensity in the local market iii) impact of
withdrawal of the DEPB scheme and impact of the weakening INR on
export realizations / margins.