3W volumes were almost flat for Q4FY19 (growth 6% QoQ). Growth in this segment was mainly because of exports (growth 34% YoY). The Company sold the highest ever number of units in the current fiscal. Exports to Egypt may remain under pressure because of regulatory concerns. This may create a hang on the 3W business as Egypt is...

Bajaj Auto (BAL) reported steady Q4FY19 numbers with a surprise on ASPs (up 5% QoQ at | 60,533/unit) & exceptional item (| 342 crore) resulting in 21% increase in PAT on a YoY basis. Net revenues came in at | 7,395 crore (up 9.2% YoY). Total volumes for the quarter were at 11.9 lakh units (up 14% YoY) wherein 2-W volumes were at 10.0 lakh units (up 17% YoY) and 3-W volumes were 1.9 lakh units (up 1% YoY). Reported EBITDA margins were at 15.7% (up 11 bps QoQ). PAT in Q4FY19 grew 20.9% YoY to | 1,306 crore. PAT was higher supported by | 342 crore as exceptional gain realised in...

Bajaj Auto (BJAUT) Q4FY19 result was in-line with our and below consensus estimates at operating level. EBITDA margin for the quarter stood at 15.7% vs our and consensus estimates of 15.8% and 16.3% respectively. We expect BJAUT domestic motorcycle sales to decline ~2% in FY20 mainly on account of higher base in commuter segment and weak buyer sentiment. We cut our FY20 revenue and earnings estimates by 1%/6% and introduce FY21 estimates. We have built in revenue/earnings CAGR of 8%/8% over FY19-21E with ROE of ~20% and average free cash flow of ~Rs45bn. We change our rating to REDUCE (earlier ACCUMULATE) and revise our TP to Rs2,670 (earlier Rs2,740)...

We re-iterate BUY as (1) Bajaj's market share is back to 25% in motorbikes (earlier seen in CY16) (2) They will launch new variants particularly in the executive segment to increase share in the domestic segment (3) The margins are stabilizing at current levels. Bajajs adj. 4QFY19 PAT at Rs 10.7bn (-1% YoY) was inline with our estimates. We expect Bajaj to grow ahead of the market in FY20 as well driven by new launches across its product range. Our revised TP is Rs 3,330 (based on its long term ten year average PE multiple of 17.5x on FY21E earnings). While the two wheeler industry growth has been benign, Bajaj has expanded market share by recalibrating its strategy. Further, the company has a diversified product portfolio with three wheelers and exports accounting for ~50% of volumes. Re-iterate BUY.

(BAL) results are ahead of estimates on the operational front. Revenues at Rs 7,395 crore rose 9% y-o-y (broadly in line with estimates) driven by a strong 14% growth in volumes. BAL's efforts to gain market share in the domestic motorcycle segment and healthy export growth boosted volumes. Realization/vehicle dropped 5% y-o-y due to an adverse mix (higher share...

EBITDA margins flat QoQ despite better mix, favorable commodity prices: Revenues grew 9% YoY to INR74b (our est. INR71.4b), with volume growth of 14% YoY. Realization improved 5.3% QoQ (down 4.6% YoY) to INR62k/unit (our est. INR59.8k/unit) due to favorable mix. EBITDA declined 12.6% YoY to INR11.6b (in-line), implying an EBITDA margin of 15.7% v/s our est. of 16% (390bp YoY, +10bp QoQ). Higher other income boosted adj. PAT to ~INR10.7b v/s our est. of ~INR10b. FY19 volumes/revenue/EBITDA/PAT grew 25%/20%/3%/10% - largely reflecting for trade-off of margins for market share. Management commentary: (a) Despite regional festivals in few states,...

Bajaj Auto (BJAUT) is strategically shifting its focus away from margins in an attempt to recoup its lost market share in domestic motorcycles. The aim is to expand its market share further to ~24% from ~18.7% now by plugging gaps in the portfolio. We expect domestic 2W demand trends to remain volatile until 1HFY21, with the risk of BS6 cost inflation puncturing the expected recovery in 2HFY20

EBITDA margin came in at 15.6% down by 397bpsYoY due to a) higher commodity cost b) higher discounts c) lower than expected forex realizations. PAT grew by 16%YoY due to higher other income We expects the EBITDA margin to be in range of 16-17% due to competition in the commuter segment. Given its strong brands and robust distribution network, BAL is in a superior position to benefit from export market. We expect revenue CAGR of 10% over FY19E-21E led by strong rural demand, new planned launches and export sales, will drive volume growth....

Strategy on entry level (M1) segment BAL took price cuts in the entry level segment in Q1FY19 to expand the lower end of market and also to gain market share. As a result, the company recorded a growth of 61% YoY in Q3FY19 as against 38% growth for the industry. CT sold over ~181,000 volumes, a growth of 77% over Q3FY18 and Platina clocked over ~195,000 units, growth of ~38% over Q3FY18. This resulted in market share improvement from 31.7% in Q3FY18 to ~37% in Q3FY19. BAL plans to occupy 45-50% of the market share in the M1 segment over the medium term. Currently, Platina sales are picking up in the near term which is profitable compared to...

Bajaj Auto (BAL) reported a muted Q3FY19 performance Total volumes for Q3FY19 were at 12.6 lakh units (up 26% YoY). Total 2-W sales volumes in Q3FY19 were at 10.8 lakh units, up 32% YoY while 3-W sales volumes were at 1.8 lakh units, down 1% YoY Domestic volume growth was at 38% in the 2-W segment (6.4 lakh units) and -17% in the 3-W segment (0.9 lakh units) Net revenues came in at | 7,409 crore (up 16.3% YoY). ASPs in the domestic business were at | 61,133/unit while the same in export...

Bajaj Auto (BJAUT) Q3FY19 result was below our and consensus estimates at operating level. EBITDA margin for the quarter stood at 15.6% vs our and consensus estimates of 16.2% and 16.5% respectively. EBITDA margin declined on account of higher forex loss...

Bajaj Auto'Q3 FY19 result continued to be a mixed bag. Topline and bottomline continued to witness strong growth while operating margin posted a significant decline. The company's net profit came in at Rs 1,220.77 crore, higher by 20%. Total income came in at Rs 7,409.36 crore,...

The policy direction in the upcoming budget will be a key determinant of two wheeler industry growth, though we expect competitive intensity to remain elevated in the near term. Bajaj Autos operating margins continue to be impacted by 1) an inferior product mix as the share of entry level models now stands at 58.4% of sales vs.52/58% YoY/QoQ 2) fall in 3W volume(-1% YoY) and 3) unabsorbed material cost in exports. Thus, EBITDA margins declined to 15.6% vs. 16.8% QoQ. However, this was offset by higher other income at Rs.4.7 bn(+23% QoQ). Thus, the reported PAT at Rs. 11bn was up +16% YoY.

Revenue grew 16% yoy to Rs74.1bn (Emkay est.: Rs73.9bn) on 26% growth in volume and an 8% drop in realization due to adverse mix. After robust volume growth of 25% in FY19E, we expect growth to taper to 8% over FY19-21E, led by a high base and price increases resulting from regulatory changes. EBITDA margin contracted 150bps qoq to 15.6% (Emkay est: 16.4%) due to lower exchange rate realization (~40bps), commodity inflation (~40bps), and adverse mix (lower share of 3Ws, higher share of Africa in exports). Going forward, focus on market share, partial absorption of regulatory costs, and adverse mix could restrict margin expansion....

BJAUT's strategy to gain market share in the domestic motorcycle segment might have provided the company and its dealers much needed volumes but at the cost of profitability and margins. Management expects to continue with this aggressive pricing strategy and consumer offers in the low margin domestic M1 motorcycle segment. Given no incremental growth expected in continue to be under pressure. We reduce our margin estimates for FY19/20E by 20/20bps, respectively. We value the stock at 15.5x Sep20 (earlier 16x Mar'20) core EPS plus Rs100 as value of investments (KTM) and maintain...

Bajaj Auto sold 13.39 lakh units in the quarter ended Sept 2018, higher by 25% compared with 10.71 lakh units sold in corresponding quarter last fiscal. Motorcycles sales increased 22.6% to 11.26lakh units while commercial vehicle sales rose 39.3% to 2.12 lakh units. While domestic...

Strategy on entry level (M1) segment BAL took price cuts in the entry level segment in Q1FY19 to expand the lower end of market and also to gain market share. As a result, the company recorded a growth of 50% YoY in Q2FY19 as against 27% growth for the industry. CT sold over ~248,000 volumes, a growth of 40% over Q2FY18 and Platina clocked over ~153,000 units, growth of ~47% over Q2FY18. This resulted in market share improvement from 32% in Q2FY18 to ~38% in Q2FY19. BAL plans to occupy 45-50% of the market share in the M1 segment over the medium term....

Bajaj Auto (BJAUT) Q2FY19 result was below our and consensus expectations at operating level. EBITDA margin for the quarter stood at 16.8% vs our and consensus estimates of 17.1% and 17.3% respectively. Net Revenue were above our and in-line with consensus estimates at Rs79.8bn due to weaker domestic realizations. Result Highlights and Investment Rationale Operationally weak quarter: Revenues grew +21.4% YoY/+7.6% QoQ to Rs79.8bn, led by growth of +25% YoY/+9% QoQ in sales volumes to 1.3mn. Net realizations continue to decline for Q2FY19 by -1.4% QoQ due to higher discounting in CT100...

Bajaj Auto (BAL) reported muted performance in Q2FY19 primarily tracking change in product mix with skewness more towards entry level products (CT100 & platina) in the domestic and export markets Total volumes for Q2FY19 stood at 13.4 lakh units (up 25% YoY). Total 2W sales volume in Q2FY19 was at 11.3 lakh units, up 23% YoY while 3W sales volume were at 2.1 lakh units, up 39% YoY. Domestic volume growth was at 19% in the 2W segment & 32% in the 3W segment. Domestic realisations stood at | 61,194/unit in...