Bajaj Auto Ltd. share price target

EBITDA Margins Bottomed Out Maintain BUY: During Q3FY19, Bajaj Auto Ltd (BAL) sales grew 16% YoY to Rs74.1bn (below our estimates of Rs75.1bn) EBITDA margins reduced by 397bps YoY to 15.6% (our estimates were 15.6%).

Bajaj Auto (BJAUT) Q3FY19 result was below our and consensus estimates at operating level. EBITDA margin for the quarter stood at 15.6% vs our and consensus estimates of 16.2% and 16.5% respectively. EBITDA margin declined on account of higher forex loss...

Bajaj Auto (BAL) reported a muted Q3FY19 performance Total volumes for Q3FY19 were at 12.6 lakh units (up 26% YoY). Total 2-W sales volumes in Q3FY19 were at 10.8 lakh units, up 32% YoY while 3-W sales volumes were at 1.8 lakh units, down 1% YoY Domestic volume growth was at 38% in the 2-W segment (6.4 lakh units) and -17% in the 3-W segment (0.9 lakh units) Net revenues came in at | 7,409 crore (up 16.3% YoY). ASPs in the domestic business were at | 61,133/unit while the same in export...

Bajaj Auto'Q3 FY19 result continued to be a mixed bag. Topline and bottomline continued to witness strong growth while operating margin posted a significant decline. The company's net profit came in at Rs 1,220.77 crore, higher by 20%. Total income came in at Rs 7,409.36 crore,...

The policy direction in the upcoming budget will be a key determinant of two wheeler industry growth, though we expect competitive intensity to remain elevated in the near term. Bajaj Autos operating margins continue to be impacted by 1) an inferior product mix as the share of entry level models now stands at 58.4% of sales vs.52/58% YoY/QoQ 2) fall in 3W volume(-1% YoY) and 3) unabsorbed material cost in exports. Thus, EBITDA margins declined to 15.6% vs. 16.8% QoQ. However, this was offset by higher other income at Rs.4.7 bn(+23% QoQ). Thus, the reported PAT at Rs. 11bn was up +16% YoY.

BJAUT's strategy to gain market share in the domestic motorcycle segment might have provided the company and its dealers much needed volumes but at the cost of profitability and margins. Management expects to continue with this aggressive pricing strategy and consumer offers in the low margin domestic M1 motorcycle segment. Given no incremental growth expected in continue to be under pressure. We reduce our margin estimates for FY19/20E by 20/20bps, respectively. We value the stock at 15.5x Sep20 (earlier 16x Mar'20) core EPS plus Rs100 as value of investments (KTM) and maintain...

Revenue grew 16% yoy to Rs74.1bn (Emkay est.: Rs73.9bn) on 26% growth in volume and an 8% drop in realization due to adverse mix. After robust volume growth of 25% in FY19E, we expect growth to taper to 8% over FY19-21E, led by a high base and price increases resulting from regulatory changes. EBITDA margin contracted 150bps qoq to 15.6% (Emkay est: 16.4%) due to lower exchange rate realization (~40bps), commodity inflation (~40bps), and adverse mix (lower share of 3Ws, higher share of Africa in exports). Going forward, focus on market share, partial absorption of regulatory costs, and adverse mix could restrict margin expansion....

Bajaj Auto sold 13.39 lakh units in the quarter ended Sept 2018, higher by 25% compared with 10.71 lakh units sold in corresponding quarter last fiscal. Motorcycles sales increased 22.6% to 11.26lakh units while commercial vehicle sales rose 39.3% to 2.12 lakh units. While domestic...

Strategy on entry level (M1) segment BAL took price cuts in the entry level segment in Q1FY19 to expand the lower end of market and also to gain market share. As a result, the company recorded a growth of 50% YoY in Q2FY19 as against 27% growth for the industry. CT sold over ~248,000 volumes, a growth of 40% over Q2FY18 and Platina clocked over ~153,000 units, growth of ~47% over Q2FY18. This resulted in market share improvement from 32% in Q2FY18 to ~38% in Q2FY19. BAL plans to occupy 45-50% of the market share in the M1 segment over the medium term....

Subdued Performance; Healthy Exports to Drive Bottom-line Bajaj Auto (BAL) has delivered a subdued operating performance in 2QFY19 with its EBIDTA margin contracting by 292bps YoY and 46bps QoQ to 16.8%. Aided by 24% YoY and 9% QoQ growth in volume to 1.33mn units, its revenue grew by 21% YoY and 7.8% QoQ to Rs78.3bn vs. our estimate of Rs81bn. ASP declined by 2.2% YoY (-1.4% QoQ) led by poor product-mix and price rationalisation. EBIDTA growth came in lower at 3.4% YoY and 5% QoQ due to lower realisation, while PAT increased by 4% YoY and 3% QoQ to Rs11.5bn (vs. our estimate of Rs11.8bn). Higher commodity prices and limited ability to pass on the same led to 327bps YoY and 98bps QoQ...