Bajaj Auto Ltd. share price target

Weak Performance; Healthy Exports to Drive Bottom-line Bajaj Auto (BAL) has delivered a disappointing operating performance in 1QFY19 with its EBIDTA margin falling by 215bps QoQ (flat on YoY basis) to 17.3%. Aided by 38% YoY and 17% QoQ growth in volume to 1.2mn units, its revenue grew by 36% YoY (+10% QoQ) to Rs74.2bn vs. our estimate of Rs77.6bn. ASP declined by 1.3% YoY (-6.6% QoQ) led by poor product-mix and price rationalisation. EBIDTA growth came in lower at 37% YoY and 3% QoQ due to lower realisation. Its net profit rose by 18% YoY (+3% QoQ) to Rs11.1bn vs. our estimate of Rs13bn. Higher commodity prices and limited ability to pass on the same led to 143bps YoY and 208bps...

company intends to take up to 45% in mid term. Bajaj Auto has taken price cuts in this segment to gain market share and has categorically targeted this segment. The company which has tasted failure in the mid segment due to the likes of the V segment is now planning to focus only on the mass and premium segments through various marketing gimmicks such as providing subventions to the customers, easy availability of finance,...

Strong sales performance led by volume growth: The company's revenue rose 36.3% YoY to Rs74,193mn in Q1FY19, driven by strong overall volume growth of 38.1%. Domestic sales stood at 688,665 units, a growth of 43.8% yoy whereas exports sales reported a growth of 31.4% to 537,976 units. The average realization contracted by 1.2% yoy due to adverse product mix as strong sales came from entry level bikes. Margin disappoints with no signal of recovery in near term: Bajaj's standalone EBITDA margin stood at 17.3% in Q1FY19 vs 17.2% in Q1FY18 (19.4% in Q4FY18), below our estimates. The marginal yoy expansion in margin was mainly due to lower employee...

Change in Growth Strategy Upgrade BUY;BAL has reduced price of its entry level motorcycle CT 100 by ~ Rs2000(7% price cut) which contributes 14% of its overall volumes.

We expect continued value migration away from the Executive motorcycle 100/125cc segment toward the Scooters (driven by wider appeal), Premium >150cc (driven by need for uniqueness and upgrade) and Entry motorcycle 100cc (driven by substantial value proposition) segments. BJAUT's strategy is to capitalize on this value migration by focusing on the Entry and Premium motorcycle segments. BJAUT attributed the loss of volumes (~1% decline) and market share (~230bp to 15.7% in domestic motorcycle) to the poor performance in the M2 & M3 segment (Executive segment) in FY18. Commuter and Commuter Deluxe segment (with a size of ~6.5m per annum) is the largest in the motorcycle industry, but BJAUT has a very weak presence with just 2.6% market share in FY18 through Discover and the V. Nevertheless, BJAUT has realized the need to compete far more vigorously in this segment.

16 July 2018 Automobiles The domestic 2W industry is expected to grow at a CAGR of ~10% until FY22, led by the Scooter (CAGR of 12-14%) and Motorcycle (CAGR of 8-9%) segments. We expect continued value migration away from the Executive motorcycle 100/125cc segment toward the Scooters (driven by wider appeal), Premium >150cc (driven by need for uniqueness and upgrade) and Entry motorcycle 100cc (driven by substantial value proposition) segments. BJAUT's strategy is to capitalize on this value migration by focusing on the Entry and Premium motorcycle segments. BJAUT's domestic motorcycle volumes grew 30% in CY18YTD (v/s 22.7% growth for domestic 2W industry), leading to a market share recovery of 90bp YoY to 15.8% in 1HCY18 (1QFY19 market share at 16.3%). Domestic motorcycle industry grew at a CAGR of just 2% over FY12-17 due to weak monsoon (FY15/16), scooterization, and demonetization (FY17), etc.

New launches The company launched New Discover 110 and Discover 125 in Q4FY18 and is currently clocking 18,000/month numbers. The management expects to achieve 25,000/month run rate in the coming months. Regarding Pulsar 150 twin disc, the product has been received well by the market and the company is currently facing...

Bajaj Auto beat market expectations with a 36% rise in net profit for the March quarter, led by a sustained growth in exports and a revival in domestic demand The company's net profit came in at Rs 1,175.47 crore vis a vis Rs 862.24 crore in previous year. Net sales of the company came in at Rs 6,773 crore, a growth of 38%. Market had pegged the bike maker's revenue to come in at Rs 6,699 crore and net profit to come at Rs 862.24 crore. Bajaj Auto sold 10.45 lakh units in the quarter ended March 2018, higher by 33% compared with 7.87 lakh units sold in corresponding quarter last fiscal. Motorcycles sales increased 22% to 8.56 lakh units while commercial vehicle sales rose 118% to 1.88 lakh units. While domestic...

ICICI Securities Ltd | Retail Equity Research Bajaj Auto reported Q4FY18 results that were above our estimates on the operational front. Net revenues were at | 6773 crore (up 38.3% YoY, 6.3%QoQ), almost in line with our estimate of | 6783 crore. The miss is attributable to lower than estimated export realisation. Domestic realisations were at ~| 68534 (vs. estimate of | 68027) while export realisation was at | 56,466 (vs. estimate of | 57328) Total volumes for Q4FY18 were at 1045378 units (up 33% YoY, 4.4%...

Bajaj Auto (BJAUT) reported 4QFY18 results earnings were above our and consensus expectations. Net Revenue were in-line with our and above consensus estimates due to better product mix. EBITDA margin for the quarter stood at 19.4% vs our and consensus estimates of 19.0% and 19.5%. Adj. PAT for the quarter stood...