Bajaj Auto Ltd. share price target

Re-iterate BUY as (1) Bajaj is well prepared for BS-VI due to its tie up with KTM. Further, 3W/exports are ~50% of volumes which provides cushion against volatility in domestic 2Ws. (2) Co is launching new premium brands in India including the Husqvarna and Triumph (3) Valuations at 17/15x for FY21/22E are not demanding and RoEs are in excess of 20%. Bajajs 3QFY20 PAT (Rs 12.6bn, +15% YoY) was ahead of estimates as operating margins surprised at 17.9% (+130bp QoQ) due to higher share of exports/3Ws as well as favorable fx. Reiterate Bajaj as preferred pick in the sector. Maintain BUY with a revised TP of Rs 3,630 (@ 18x Dec-21E EPS).

Bajaj Auto's (BJAUT) Q3 EBITDA rose 18% YoY led by 17.9% margins (seven-quarter high) and beat estimates by ~10%.

30 January 2020 BJAUTs strong operating performance in the quarter was driven by mix, RM and FX. leverage) and RM are likely to exert pressure on margins over the next 2-3 quarters. We marginally upgrade our EPS estimate but maintain our with a target price of ~INR3,373 (~16x Dec21E consol. Revenue/EBITDA/PAT grew 3%/13%/14.5% YoY to INR76.4b/INR13.7b/INR12.6b in 3QFY20. For 9MFY20, revenue was up 1% YoY, EBITDA declined 3% YoY, while PAT increased 2.5% YoY. The sequential decline is a reflection of the higher share of economy motor cycles and lower 3Ws, as well as higher consumer marketing schemes (netted-off from revenue).

Bajaj Auto Ltd (BAL) is expected to outpace the 2W industry growth in a challenging demand environment. Domestic 2W industry growth is expected to remain under pressure over the next three to four quarters due to huge cost increases on account of transition from BS4 emission norms to BS6 emission norms. Amongst listed players, BAL would be the least impacted by the transition due to lower inventory, higher share of exports (which are immune to BS6 Norm change) and higher share of premium bikes which would see a relatively lower cost...

Mixed results; BSVI launch expected next year 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...

been marginally in favour and the management said that it had raised product prices in July and September quarter. Due to cost control and low raw material cost Ebitda (earnings before interest, tax, depreciation and amortization) stood at 16.6%, an improvement of about 120...

Re-iterate BUY as (1) Industry demand trends are improving after several quarters of decline (2) Bajaj is well prepared for BSVI due to its tie up with KTM. Further, 3W/exports are ~50% of volumes which provides cushion against volatility in domestic 2Ws. (3) Co will launch new premium brands in India including the Husqvarna and Triumph (agreement is expected to be finalized shortly). Bajajs 2QFY20 PAT (Rs 14bn, +22% YoY) was ahead of estimates as operating margins surprised at 16.6% (+110bp QoQ) & lower tax rates aided profitability. Reiterate Bajaj as preferred pick in the sector. Maintain BUY with a revised TP of Rs 3,530 (@ 18x Sep-21E EPS).

Bajaj Auto (BJAUT) Q2FY20 result was below our and above consensus estimates at operating level. EBITDA margin for the quarter stood at 16.6% vs our and consensus estimates of 17.2% and 15.7%. We cut our FY20/FY21 volume estimates by 4%/5% respectively, factoring the current slowdown. We expect two-wheeler industry volumes to be weak over the next 12 months, as cost increases (BSIV to BSVI transition) would hurt 2W industry demand. We cut our revenue and earnings estimates for FY20/FY21 by 3%/8% and 7%/12% respectively on account of lower volumes and higher promotion expenses. We have built in revenue/earnings CAGR of 5%/7% over FY19-21E with ROE...

BAL stands apart from the competitor pack given the scale of its presence across geographies in both 2-W as well as 3-W segments (FY19 volumes of 25.7 lakh units of which 50% domestic 2-W, 34% export 2-W, 8% domestic 3-W, 8% export 3-W). It has been able to broadly outperform its peers during the ongoing slowdown given the strength of its export performance as well as concentrated focus on the motorcycle segment, which has fared better than scooters and mopeds. This reflects in its market share gains (domestic motorcycle market share of 18.1% as of September 2019 vs. 17.5% YoY)....

Returning to Normalcy Maintain HOLD: During Q2FY20, Bajaj Auto Ltd (BAL) sales declined by 4.1 percent YoY to Rs 77.1bn