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N o t t h r i l l e d ! C o r e g r o w t h r e m a i n s f r a g i l e …
Bajaj Auto (BAL) reported its Q3FY12 numbers with sales coming in
above our estimate at | 5,063.2 crore (I-direct estimate: | 4,967.9 crore) a
21.2% YoY jump. It was driven by a mix of volume growth (up 13.6%
YoY) at 1.07 million units and higher realisation/unit (up 5.0% YoY) to |
47,276. BAL had hiked prices ~3.5% to offset the DEPB impact coupled
with benefits arising from a depreciating rupee as average USD rate for
the quarter was higher 3.3% QoQ at | 49.4. RM cost as proportion to
sales declined 103 bps QoQ as EBITDA margins got enhanced to 21.0%
(up ~90 bps QoQ). Reported PAT was ahead of our estimates at ~| 795.2
crore (I-direct estimate: | 788.0 crore), a jump of 19.2% YoY. However,
we will analyse beyond these numbers further in the report.
Highlights of the quarter
Bajaj Auto’s overall volume growth of 13.6% YoY was led by three
wheeler growth of 18.8% YoY and motorcycle volume growth of 12.9%
YoY. Although the export volume growth is robust at 28.4% YoY, we
remain cautious on the domestic growth front as early signs of an
industry wide slowdown have started creeping in. The weak domestic
market performance is reflected in a QoQ dip of 7.6% with overall
domestic sales in December sliding below the 2 lakh unit mark for the first
time in FY12. Bajaj Auto had previously undertaken a price hike across its
export segment to cover the impact of DEPB. The recently launched
Boxer-150 cc has not met expectations with BAL looking at repositioning
the same. The management expects Q4FY12 industry growth to slide
down to ~5-6% and does not expect a “V-shaped” rebound for the same
in FY13 in line with our bearish stance for the segment.
V a l u a t i o n
We believe BAL’s domestic volume growth is under serious threat as
witnessed in the last couple of months and exports have been the only
shining light. On exports also, we believe competition from Honda and
Hero MotoCorp would be stiff. Any appreciation of the rupee could
impact our estimates negatively. At the CMP of | 1,561, the stock is
trading at 13.7x FY13E EPS. We have valued the stock at 13.9x FY13E EPS
to arrive at a target price | 1,460. We maintain our HOLD rating on BAL.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
N o t t h r i l l e d ! C o r e g r o w t h r e m a i n s f r a g i l e …
Bajaj Auto (BAL) reported its Q3FY12 numbers with sales coming in
above our estimate at | 5,063.2 crore (I-direct estimate: | 4,967.9 crore) a
21.2% YoY jump. It was driven by a mix of volume growth (up 13.6%
YoY) at 1.07 million units and higher realisation/unit (up 5.0% YoY) to |
47,276. BAL had hiked prices ~3.5% to offset the DEPB impact coupled
with benefits arising from a depreciating rupee as average USD rate for
the quarter was higher 3.3% QoQ at | 49.4. RM cost as proportion to
sales declined 103 bps QoQ as EBITDA margins got enhanced to 21.0%
(up ~90 bps QoQ). Reported PAT was ahead of our estimates at ~| 795.2
crore (I-direct estimate: | 788.0 crore), a jump of 19.2% YoY. However,
we will analyse beyond these numbers further in the report.
Highlights of the quarter
Bajaj Auto’s overall volume growth of 13.6% YoY was led by three
wheeler growth of 18.8% YoY and motorcycle volume growth of 12.9%
YoY. Although the export volume growth is robust at 28.4% YoY, we
remain cautious on the domestic growth front as early signs of an
industry wide slowdown have started creeping in. The weak domestic
market performance is reflected in a QoQ dip of 7.6% with overall
domestic sales in December sliding below the 2 lakh unit mark for the first
time in FY12. Bajaj Auto had previously undertaken a price hike across its
export segment to cover the impact of DEPB. The recently launched
Boxer-150 cc has not met expectations with BAL looking at repositioning
the same. The management expects Q4FY12 industry growth to slide
down to ~5-6% and does not expect a “V-shaped” rebound for the same
in FY13 in line with our bearish stance for the segment.
V a l u a t i o n
We believe BAL’s domestic volume growth is under serious threat as
witnessed in the last couple of months and exports have been the only
shining light. On exports also, we believe competition from Honda and
Hero MotoCorp would be stiff. Any appreciation of the rupee could
impact our estimates negatively. At the CMP of | 1,561, the stock is
trading at 13.7x FY13E EPS. We have valued the stock at 13.9x FY13E EPS
to arrive at a target price | 1,460. We maintain our HOLD rating on BAL.
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