Bajaj Auto Ltd. share price target

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

New launches and festive season provide a ray of hope In the domestic MC business, Bajaj launched CT 110 and Platina 110 variants in June-July. They contributed bulk of the CT and Platina sales. Q2 reported a big fall in domestic MC sales at 25% yoy, while in H1, it fell by 12% yoy. With BS VI implementation around the corner, the company...

Management has guided margins that margins could be bottoming out if raw material prices don't fluctuate much. Rise in fixed cost may weigh on earnings in a difficult macro environment. The outlook on the motorcycle industry still remains weak but Bajaj Auto...

Bajaj Auto (BJAUT) Q1FY20 result was tad below our and consensus estimates at operating level. EBITDA margin for the quarter stood at 15.4% vs our and consensus estimates of 15.7% each. We expect BJAUT domestic motorcycle sales to decline ~4.5% in FY20 mainly on account of higher base in commuter segment and weak buyer sentiment. We marginally increase our FY20/FY21 volume estimates by 1.9%/0.5% respectively, mainly on account of higher volume from export market. We increase our revenue and earnings estimates for FY20/FY21 by 2.5%/1% and 6%/4% respectively on account of lower RM cost and lower promotion expenses. We have built in...

Bajaj Auto (BAL) reported a steady Q1FY20 performance. Net revenues came in at | 7,756 crore, up 4.5% YoY. Revenues grew higher than the 2% YoY volume growth to 12.5 lakh units given higher blended ASP of | 62,187/unit. The 2-W volumes were up 5% YoY to 10.8 lakh units while 3W volumes were down 16% YoY to 1.6 lakh units. Total exports were at 5.5 lakh units, up 2% YoY. EBITDA margins were at 15.4%, down 27 bps QoQ. BAL realised a marginal softening in input costs during Q1FY20. However, higher employee and other expenses as a percentage of sales dented...

year. Bottomline would have dropped more if not for rise in other income. Bajaj Auto sold 12.47lakh units in the quarter ended June 2019, higher by 1.7% compared with 12.26 lakh units sold in corresponding quarter last fiscal. Motorcycles sales increased 5.1% to 10.82lakh units while commercial vehicle sales dropped 16.3% to 1.64lakh units.While...

During Q1FY20, Bajaj Auto Ltd (BAL) sales grew by 3.9% YoY to Rs77.6bn (above estimates of Rs74.7bn) EBITDA margins reduced by 249bps YoY to 15.4% (our estimates were 15.6%).