Bajaj Auto results - Motilal Oswal

Bajaj Auto Outlook:

We believe worst is over for Bajaj Auto and expected gradually improvement from here-on. Our preliminary estimates suggests ~2% EPS cut for FY13/FY14.

Based on our current estimates, the stock is valued at 13x FY13E EPS of INR111.3 and 11x FY14E EPS of INR132.

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BAJAJ AUTO 1QFY13: below est; EBITDA at INR8.7b (v/s est INR9.3b); EBITDA margins decline 190bp QoQ to 17.9% (v/s est 18.7%)

-       Volumes de-grew by 1.3% YoY (+6% QoQ) to 1.08m units. Realizations up 5% YoY (-1.4% QoQ) to INR45,095/unit (v/s est INR45,440) due to adverse product/market mix, leading to net revenues growth of 3% YoY (5% QoQ) to INR48.6b (v/s est INR49.8b).

-       EBITDA margin declined by 190bp QoQ (+10bp YoY) to 17.9% (v/s est 18.7%), impacted by adverse product (lower 3W volumes) and market mix (lower exports), higher staff cost (+70bp QoQ) despite 6% QoQ higher volume growth and higher other expenses (no benefit of operating leverage).

-       EBITDA de-grew by 5% QoQ (+4% YoY) to INR8.7b (v/s est INR9.3b). Higher other income at INR1.8b (v/s est INR1.3b) boosted adj PAT to INR7.2b (v/s est INR7.27b) – 1% YoY growth (-5% QoQ).

-       Based on our current estimates, the stock is valued at 13x FY13E EPS of INR111.3 and 11x FY14E EPS of INR132.