Bajaj Auto Ltd. share price target

Q2 top line excels, margins below expectations Bajaj Auto posted a mixed bag of numbers in Q2 FY19, though volumes in the quarter grew by a handsome 25% yoy and 9.2% qoq to its highest ever quarterly volumes of 1.34 mn units. Despite such a strong show, the realizations dropped by 3% yoy and 1.3% qoq to 58,470/unit. This was a result of adverse product mix where the company sold more volumes of CT 100 and Platina belonging to the mass/M1 segment. This was due to company's strategy of gaining market share in the M1 segment by providing heavy discounts and subvention schemes. As a result of this, EBITDA margins touched lows of 16.8% also thanks to the RM price growth. RM costs as a % of...

Bajaj Auto has introduced an exciting new opportunity in form of 5-5-5 offer to buy Bajaj motorcycles in India. This offer commences from October 5, 2018 where customers get the benefit of five years of free own damage insurance cover, five free services and five years of free warranty on select Bajaj motorcycles (Platina, Discover, Pulsar and the V range of motorcycles) across all dealerships in India at no additional cost. Bajaj Auto is the first in the industry to introduce such an offer through the 5-5-5 scheme. One of the key benefits of this offer is five years of free own damage insurance cover for customers buying these bikes. We believe that...

Company outperformed the industry recording a growth of 19% over Q2 FY18 as against industry growth of 8%. Overall share in the domestic motorcycle market increased to 18.6% as against 16.9% in Q2 FY18. For September 2018, overall share in domestic motorcycle market was...

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 74% YoY in Q1FY19 as against 30% growth for the industry. CT recorded over ~190,000 volumes, a growth of over 76% over Q1FY18 and Platina clocked ~104,000 units, growth of ~35% over Q1FY18. This resulted in market share improvement from ~25% in Q1FY18 to ~34% in Q1FY19. BAL plans to...

Bajaj Auto (BJAUT) reported Q1FY19 results earnings were below our and consensus expectations. Net Revenue were below our and consensus estimates due to weaker domestic realizations. EBITDA margin for the quarter stood at 17.3% vs our and consensus estimates of 19.5% each. Adj. PAT for the quarter stood at Rs11.1 bn below our and consensus estimates of Rs12.3 bn and Rs12.4 bn due to higher RM cost. Revenues grew +36% YoY/+10% QoQ to Rs74.1bn (IDBI: Rs79.2bn; Consensus: Rs77.6bn), led by growth of +38% YoY/+18% QoQ in sales volumes and -7% QoQ decline in net realizations. Sales volumes were supported by growth of +86% YoY/-20% QoQ and +39%...

ICICI Securities Ltd | Retail Equity Research Bajaj Auto reported Q1FY19 results below our estimates on the operational front. Net revenues came in at | 7419 crore (up 36.3% YoY, 9.5% QoQ) against our expectation of | 7979 crore. The miss at the topline level is attributable to lower-than-expected realisations in both the domestic as well as export business Domestic revenues came in at | 4116 crore (up 26.2% YoY, down 3.1% QoQ) vs. our expectation of | 4578 crore while export revenues...

Bajaj Auto Limited ( BAL) is a $2.3 billion company founded in 1926. It is world's fourth largest two and three wheelers manufacturer. BAL has three plants in all, two at Waluj and Chakan in Maharashtra and one plant at Pant Nagar in Uttaranchal. In India, company has a distribution network of 650 dealers and over 1,600 authorized services centers. It has 171 exclusive dealers for the three wheeler segment .It has total 3750 rural outlets. The Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. It has a distribution network in 50 countries...

Global short-end yields rose as US Fed chairman indicated that the economy continues to do well and two more rate hikes are on the cards. US and European equity markets went up as economic data remains robust. Crude prices went down as US may ease its stance on Iran sanctions. This along with another Rs 100bn OMO supported the domestic bond market. Even FPI inflows were seen in debt market. INR fell to 69.05/ USD as equity outflows...

Maintain BUY with a SOTP-based TP of Rs 3,394 (18x 20E Core EPS + cash + 40% discount for KTM stake) vs Rs 3,712 earlier. Aggressive pricing and higher contribution of entry level models in the sales mix weighed on 1QFY19 margins for Bajaj Auto (BJAUT). Net revenue at Rs 74.2bn (+36% YoY) was led by stellar 38% volume growth (2W +33%, 3W +74%), but was partially offset by ~1% decline in net realization. EBITDA rose 36% YoY at Rs. 12.8bn at a disappointing 17.3% margin. APAT rose 17%.

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,...