Bajaj Corp Ltd. (BCL) | Q2FY13 Result Update | Inline Performance - margin expansion led to positive surprise | Q2FY13 Result Highlights: Bajaj Corp Ltd (BCL) performance in Q2FY13 quarter was in-line with our expectations. BCL’s top line grew by 27.2% yoy (down 1.6% qoq) to Rs.1,359mn (INSPL est: Rs.1,377 mn) led by 18.70% yoy and 8.5% yoy growth in volume and pricing, respectively. Driven by healthy revenue, EBITDA grew 42.6% yoy and 0.5% qoq to Rs.391 mn (INSPL est: Rs.384 mn). EBITDA margin expanded +310bps yoy to 28.8% (v/s INSPL est: 27.9%) on-account of decline in material and advertisement expenditures, partially offset by increase in other expenditures. During the quarter, LLP prices declined 6% yoy (+0.6% qoq) and refined oil prices went up by 26% yoy (+11.6% qoq). BCL reported other income of Rs.98 mn v/s Rs.90 mn in Q1FY13 and Rs.99mn in Q2FY12. Tax rate during the quarter remain constant at 20% on qoq basis (but below on yoy basis - 22% in Q2FY12). Net profit grew 33.7% yoy (up 2.1% qoq) to Rs.384 mn (INSPL est: Rs.364mn) led by higher EBITDA base and other income. Adjusting other Income, net profit went up 51.7% yoy, however down 0.1% qoq to Rs.286mn. Valuations: At CMP or Rs.187, stock is trading at 19.2x FY13E and 16.1X FY14 earnings estimates; which is 49%/81% discount to average FMCG industry forward P/E multiples. We like the BCL’s ability to report high double-digit revenue growth on back of strong brand, deep distribution network and leadership position in high growth almond light hair oil segment. Further, utilization of cash for acquisition and new product launch seems to be a right strategy to diversify revenue risk. We maintain our HOLD rating with upward revision in the target price of Rs.205 (9.6% upside potential) on stock.
Regards
IndiaNivesh Research
No comments:
Post a Comment