Bajaj Auto Ltd. share price target

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Jinesh Gandhi - Research Analyst (Jinesh@MotilalOswal.com); +91 22 3982 5416 Suneeta Kamath - Research Analyst (Suneeta.Kamath@MotilalOswal.com) | Deep Shah - Research Analyst (Deep.Shah@MotilalOswal.com) Investors are advised to refer through important disclosures made at the last page of the Research Report....

Q2FY18 EBITDA was 6% higher than estimates driven by EBITDA margin beat (20.4% vs. estimate of 19%) on better product mix. Management indicated strong (early) festive demand with ~30% retail growth YoY and, expects volume growth to pick up in H2FY18.

to 19.7% leading to marginal rise in operating profit to Rs 1298.4 crore. The OPM during the quarter fell due to higher raw material, other and employee cost. The raw material costs including traded goods cost, as % to sales net stock adjusted, rose 200 bps to 63.5%. Staff cost fell 16 bps at 4.08%. Other expenditure fell 7 bps to 7.3%. With 13% drop in other income at Rs 296.44 crore, PBIDT fell 3% at Rs 1595 crore. There was negligible interest cost of Rs 48 lakh (vis a vis Rs 68 lakh of last year). Depreciation charges were steady Rs 76.97 crore and hence PBT fell 3% to Rs 1517.4 crore. With 130 bps drop in tax rate...

ICICI Securities Ltd | Retail Equity Research Bajaj Auto reported its Q2FY18 results, which were above our estimates on the operational front. Revenues came in at | 6580 crore (up 8.7% YoY, 20.9%QoQ) against our estimate of | 6721 crore. The miss is attributable to lower than estimated realisation. Gross blended realisations declined 0.9% QoQ to ~| 64050 Total volumes for Q2FY18 were at 1071510 units (up 4% YoY, 21% QoQ). Domestic volumes grew 2% YoY, 40% QoQ to 668935 units....

We have trimmed our FY18E by 3%, factoring in lower 1HFY18 volumes. Maintain BUY with a SOTP-based TP of Rs 3,598 (20x 19E Core EPS + cash + 30% discount for KTM stake). Bajaj Autos (BJAUT) 2Q EBITDA at Rs 13bn (flat YoY), and margin at 19.7% came in-line with estimates. Net revenue came in at Rs 65.8bn (+8% YoY), owing to an increase in volumes (+4% YoY).

EBITDA margin recovers from multi-quarter low: EBITDA came in flat YoY at INR13b (in-line), implying EBITDA margin of 19.7% (-170bp YoY, +250bp QoQ; est. of 19.1%). Lower-than-estimated RM cost and lower staff cost boosted the operating performance. The impact of lower other income was diluted by a lower tax rate. Adj. PAT declined 1% YoY to INR11.1b (est. of INR11.2b). Management commentary: (a) Company expects domestic motorcycle industry growth at 8-8.5% in FY18, with BJAUT's domestic motorcycles growth at ~3% (+20% in 2HFY18). (b) Recent launches of CT100 ES, Platina and Pulsar...

Bajaj Auto (BAL) & Triumph Motorcycles UK announced their global partnership to deliver mid capacity motorcycles for the Indian & global markets. This non-equity partnership will help BAL gain access to the iconic Triumph brand & technology. BAL will make a new range of locally developed Triumph bikes at its Chakan facility in Pune. Triumph is one of the oldest motorcycle brands (established in 1902), producing 65,000 bikes per year. It operates out of 55 countries in the world with manufacturing or assembly operations in only four countries, i.e. UK,...

In the concall, the management highlighted that its domestic motorcycle market share has suffered due to the recent transition from BS-3 to BS-4 emission norms where all players except Bajaj saw huge pre-buy (at a high discount) and consequently dry channel which was filled last quarter. It expe..