Bajaj Auto Ltd. share price target

The deep economic impact of the Covid-19 disruption has brought about a role reversal in our immediate and medium term expectations for the auto sector. Earlier, the PV segment was seen outperforming on the back of rising premiumisation content and an expanding UV portfolio. However, with income levels and ensuing propensity to spend under pressure now in the wake of the pandemic, we feel the 2-W space would now be the frontrunner in coming quarters. Within 2-W, rural-heavy motorcycle sub-segment is expected to lead the charge owing to (i) relatively lower Covid-19 outbreak...

Bajaj Auto reported a resilient Q4FY20, with all round beat. Revenues were down 8% (v/s expectation of 15%), Gross Margin was up 340 bps (YoY) on account of better product mix and favourable currency.

Finacing concerns for domestic 3Ws although no conern on 2W so-far. BJAUT results look better at Revenue/EBITDA/PAT where EBITDA margin came in at 18.4% (PLe 16.2%), expanding 50bp QoQ. The beat in margin was led by higher realizations at Rs68.7k/unit (PLe Rs63.7k/unit) aided by favorable mix and forex movement. We have slashed FY21/22 eps estimates by 5.3%/2.6% as we cut sales by 11%/8% due to uncertainties in both domestic and exports volumes (both in 2W and 3W). BJAUT is already...

Bajaj Auto's (BJAUT) Q4 operating performance was well ahead of estimates.

The festivals started on a slow note, but History indicates a strong correlation between weak oil & impact on its exports (FY16 & picked up during the last few days of FY17). We think this will repeat in FY21e as well & expect ~27% YoY degrowth in exports. Navratri/Dussehra post clarification on GST,...

Bajaj Auto posted a strong set of numbers in Q4 FY20, as a volume fall 0f 17% yoy was quite arrested by a 10.1% hike in realizations on a better product mix and benign hike in input costs. The topline fell by 8% yoy and 11% qoq. Better realizations, steady forex benefits, RM costs tailwinds led to an 8 quarter high EBITDA margins at 18.4% up from 15.7%/17.9% yoy and qoq respectively. RM costs to sales ratio fell to 70.6% from 74% yoy and 71.8% qoq leading to a robust margin performance. Other income grew by 23%, while depreciation grew by just 4%. On 24% tax rate, net profits zoomed up by 36% yoy to 13.1 bn. On a qoq basis, they grew by 4%. Covid -19 impact to be seen in H1 FY 21, all hopes on H2.....

Bajaj Auto Limited (BAL) Q4 FY20 results were ahead of our as well as street estimates on account of better realisations per vehicle, driven by a better product mix and higher export realisations. Favourable currency movement and soft commodity prices helped margins beat estimates. Going ahead, the two-wheeler industry is likely to witness faster recovery driven by higher rural exposure. A strong rabi harvest, expectations of good monsoon and the government's recent reforms to open end markets for farmers would boost farm incomes and in turn, two-wheeler demand....

20 May 2020 Bajaj Autos (BJAUT) strong operating performance was driven by mix and Fx, which supports our view that the company has several levers to protect margins. Volume recovery for both India and exports is expected in 2HFY21, with risk of financing for India and oil prices/Fx devaluation for exports. We downgrade our EPS for FY21/FY22E by 4% as we cut volumes but factor in the favorable Fx. Maintain our rating. 4QFY20 revenue/EBITDA/PAT grew -8%/2%/23% YoY to INR68.2/ INR12.5b/INR13.1b. Realizations grew 10.5% YoY (8% QoQ) to INR68.7k (v/s est. INR64.7k), driven by better mix (higher 3W, exports and premium motorcycles) and Fx. Gross margins improved ~150bp QoQ (+340bp YoY), driven largely by mix, higher share of premium motorcycles and favorable Fx.

We recommended SELL on BAJAJ AUTO with a Target Price of Rs 2450, a downside of 9% from CMP and Stop Loss Rs 2785.

We are initiating coverage on Bajaj Auto with a HOLD rating as significant headwinds of COVID19 and low crude oil prices will lead to near term pressure on BJAUT but we expectit to outpace industry growth in the long run led by 1) Innovation in product with a dual focus on entry and premium segment.