Bajaj Auto Ltd. share price target

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. Bajaj Auto is a part of the Bajaj Group. The company is based in Pune, Mumbai with plants in Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttarakhand. Bajaj Auto is India's largest exporter of...

Short term margin blip on anvil, directional intent to inch ~19% The company's performance surprised us positively on the gross margins front (we had estimated ~250 bps deterioration). The company has guided for ~300 bps sequential decline in gross margins in Q4FY21E given the sharp increases in prices of input materials (base metals). BAL's price hikes to counteract cost pressures are slated to be spread out and gradual in nature. Longer term margin commentary is positive, however, with sustainable levels seen closer to stellar reading seen in Q3FY21 (~19.5%)....

We retain BUY rating with revised TP of Rs. 4,150 (Rs. 3,500 earlier) (which includes Rs 150/share for companys stake in KTM) as we value the stock at 17x (16x earlier) its FY23E EPS.

Bajaj Auto (BJAUT) Q3FY21 result was above our and consensus estimates at EBITDA and Adj. PAT level due to lower RM/ operating cost and higher other income. We believe as restoring life back to normalcy and business as usual; with gradual opening up of educational institutes/colleges, organic demand for 2-wheelers should progressively start coming back. We expect domestic 2W/3W industry to see a double growth for FY22 on a low base. We anticipate stronger recovery in export market for 2W/3W segment would help BJAUT to partially mitigate any slowdown in domestic market in near term. We build our volume growth estimates for FY21/FY22/FY23 by...

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....