We cut 3% EPS for FY18E, factoring in lower OPM in 1QFY18, but keep FY19 numbers intact. Maintain BUY with a SOTP-based TP of Rs 3,296 (19x 19E Core EPS + cash + 30% discount for KTM stake) Bajaj Autos (Bajaj) 1Q EBITDA at Rs 9.4bn (-20% YoY) and margin at 17.2% came in below estimates, owing to 279bps YoY fall in gross margin and higher employee expenses. Net revenue came in at Rs 54.4bn (-5.3% YoY), owing to a fall in volumes (-11%YoY), offset by ASP growth (+6.5% YoY). ASP growth was driven by a price hike taken on BS4 vehicles, and a better product mix. APAT at Rs 9.5bn (-2.3% YoY) was above expectations, led by higher other income (dividend received from KTM).