Bajaj Auto Ltd. share price target

Bajaj Auto's (BJAUT) Q3FY21 revenue was in line with projections.

longer time to return to normalcy. Schools and offices are yet start at full strength and is therefore functioning at 40% pre-Covid levels. However, management believes that 3W will come back to normalcy in a quarter, which according to us is a bit optimistic. However, there is some positive movement on the cargo side of 3W (70% pre-Covid levels) due to movement of essential goods...

EV 3W launch in 2HFY22 while one/two new/upgrade per quarter for 2Ws. BJAUT's 3QFY21 revenues were in-line while there was ~6.6%/6% beat at EBITDA/adj. PAT. This was led by continued tight cost control. EBITDA margins expanded 150bp YoY at 19.4% (PLe 18%) helped by better gross margins at 29.2% (PLe 28.5%) due to favorable mix. While near term outlook...

Domestic auto industry volumes have been on a steady mend in the months post lifting of lockdown restrictions. Manufacturing and distribution activities have been getting ramped up gradually since June 2020, in step with the rest of the economy. However, the impact of the pandemic on the supply chain continues to inhibit a complete return to production normalcy. Nevertheless, most automotive industry segments have reported successive improvement in offtake throughout June-November 2020 (Exhibit 1) on the back of (i) initial bounce provided by pent-up aspect,...

Bajaj Auto remains the 2nd largest player (~18% market share) in the domestic motorcycle segment and continues to be the largest exporter of two-wheelers in India.

Bajaj Auto Limited ( BAL) revenue from operations declined by 7.2% YoY but increased by 132% QoQ to Rs 71559 mn as CV volumes failed to pick up, while 2-wheeler sales saw an uptick by the quarter end. Domestic Volumes declined by 9%YoY at 573,586 units whereas Export volume declined by 20% YoY at 479,751. in Q2FY21. EBIDTA for Q2FY21 remained flat on YoY basis, however grew by 210% Q0Q at Rs 12,662 mn in Q2FY21 EBIDTA margin expanded by 111 bps YoY & 443 bps Q0Q to 17.7% helped by lower costs of production and lower other expenses....

Bajaj Auto is the world's sixth-largest manufacturer of motorcycles and the second-largest in India. It is also the world's largest three-wheeler manufacturer. The company is based in Pune, Mumbai with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttarakhand. Bajaj Auto...

We have revised our estimates upwards for FY22/23 given better than expected recovery in the 2W market and positive management commentary. We retain BUY rating with revised TP of Rs. 3,500 (Rs. 3,300 earlier) as we value the stock at 16x its FY23E EPS.