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S u b - 2 0 % m a r g i n s t h e n e w n o r m a l …
Bajaj Auto (BAL) reported a disappointing set of numbers for Q1FY12.
The topline was below our estimate at | 4777 crore (I-direct estimate: |
4910.3 crore), a 22.8% YoY jump. This was driven by volume growth of
~17.7% at 1.09 million units. However, blended realisation was up YoY at
3.2% witnessing a fall of 3.3% QoQ. This dip could be attributed to a
higher share (up 2.6% QoQ) of the lower end executive segment (<125
cc) in motorcycle sales. BAL has witnessed a drop of ~140 bps in EBITDA
margins at 19.1% as input commodity costs have been realigned in FY12
leading to per unit rise of ~1.0% QoQ. On the other income front, BAL
witnessed a decline due to lower yield that can be attributed to dividend
distribution in Q1FY12. The PAT stood at | 711 crore (I-direct estimate: |
780 crore), a jump of 20.5% YoY.
Highlights of the quarter
BAL has shown strong volume growth of 15% QoQ at ~1.09 million units
with motorcycles (~88% of volumes) and three-wheelers witnessing
~15% and ~16% QoQ growth. Pulsar and Discover volumes seem to
have come off from FY11 highs of ~95,000 units and ~135,000 units to
~75,000 units and ~110,000 units, respectively. BAL has seen strong
export growth in African markets that has supported domestic market
share decline of ~170 bps YoY. The major concern for BAL is withdrawal
of DEPB benefits by the government post Q2FY12, which would leave a
gap of 5-6% in terms of incentive. BAL intends to cover this through
hiking prices in export markets along with reducing channel benefits. This
could lead to a decline in volumes in the near term to maintain margins.
V a l u a t i o n
Domestic volumes are expected to remain positive with new product
offerings in the Pulsar and Boxer series. However, margin premium of
~20% enjoyed in previous years is expected to come off slightly. At the
CMP of | 1,416, the stock is trading at 14.0x FY12E EPS of | 102.1 and
12.3x FY13E EPS of | 115.2. We have valued the stock at the P/E of 13.5x
FY13E EPS of |115.2 to arrive at | 1,555 per share, implying a 10% upside
from its present levels. We maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
S u b - 2 0 % m a r g i n s t h e n e w n o r m a l …
Bajaj Auto (BAL) reported a disappointing set of numbers for Q1FY12.
The topline was below our estimate at | 4777 crore (I-direct estimate: |
4910.3 crore), a 22.8% YoY jump. This was driven by volume growth of
~17.7% at 1.09 million units. However, blended realisation was up YoY at
3.2% witnessing a fall of 3.3% QoQ. This dip could be attributed to a
higher share (up 2.6% QoQ) of the lower end executive segment (<125
cc) in motorcycle sales. BAL has witnessed a drop of ~140 bps in EBITDA
margins at 19.1% as input commodity costs have been realigned in FY12
leading to per unit rise of ~1.0% QoQ. On the other income front, BAL
witnessed a decline due to lower yield that can be attributed to dividend
distribution in Q1FY12. The PAT stood at | 711 crore (I-direct estimate: |
780 crore), a jump of 20.5% YoY.
Highlights of the quarter
BAL has shown strong volume growth of 15% QoQ at ~1.09 million units
with motorcycles (~88% of volumes) and three-wheelers witnessing
~15% and ~16% QoQ growth. Pulsar and Discover volumes seem to
have come off from FY11 highs of ~95,000 units and ~135,000 units to
~75,000 units and ~110,000 units, respectively. BAL has seen strong
export growth in African markets that has supported domestic market
share decline of ~170 bps YoY. The major concern for BAL is withdrawal
of DEPB benefits by the government post Q2FY12, which would leave a
gap of 5-6% in terms of incentive. BAL intends to cover this through
hiking prices in export markets along with reducing channel benefits. This
could lead to a decline in volumes in the near term to maintain margins.
V a l u a t i o n
Domestic volumes are expected to remain positive with new product
offerings in the Pulsar and Boxer series. However, margin premium of
~20% enjoyed in previous years is expected to come off slightly. At the
CMP of | 1,416, the stock is trading at 14.0x FY12E EPS of | 102.1 and
12.3x FY13E EPS of | 115.2. We have valued the stock at the P/E of 13.5x
FY13E EPS of |115.2 to arrive at | 1,555 per share, implying a 10% upside
from its present levels. We maintain our BUY rating on the stock.
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