Bajaj Auto Ltd. share price target

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...

Revenue increased by 6.48% to Rs. 6650.81 Cr in Q4FY18 when compared to the previous quarter. Bajaj Auto Ltd Q4FY18 results Comment

somewhat offset by higher tax rate at 32.2% with lower benefits from PN plant led to net profits slightly above street expectations at 10.8 bn, which was 23% higher yoy. Newly launched motorcycles, 3W permits to drive volumes in the domestic markets...

Looking ahead, we expect BAL to benefit from the expected industry growth over FY19-FY20 despite competitive intensity. We believe exports to grow ahead of domestic sales owing to improving Middle East markets and expansion/penetration into newer markets, which coupled with INR depreciation would aid in margin expansion for BAL. We expect BAL's volume to clock ~12% CAGR over FY18-FY20E. We further expect BAL to record an EPS of Rs188.4 on revenue of Rs335bn in FY20E. In view of ~22% RoE, healthy margin profile and positive export outlook, we recommend BUY on BAL with a Target Price of Rs3,165, valuing the stock at 16x...

During 4QFY18, Bajaj Auto (BJAUT) reported EBITDA margin of 19.4% (+90bps YoY, +10bps QoQ) due to positive operating leverage accruing from 33% volume growth (despite a 160bps YoY drop in gross margin). With the upswing witnessed in oil price and ramp-up in newly added markets, export volume witnessed second successive quarter of 25%+ YoY growth. However, domestic 2W segment growth of 20.3% YoY in 4QFY18 was lower than the industry's 24.8%. The company is confident of regaining market share in FY19 with CT100 and the new Pulsar (with twin discs) acting as the primary growth drivers. BJAUT has taken a price hike of 1-1.5% during Mar'18 and May'18, to offset the impact of commodity...

Premiumization in core businesses to drive growth... Bajaj Auto Ltd (BAL) is the second largest manufacturer of two - wheelers, and also world's largest three-wheeler manufacturer. Apart from manufacturing under the Bajaj brand name, it also distributes motorcycles in India for other manufacturers, such as the Kawasaki and KTM. Exports contribute 35% of consolidated revenues....