Bajaj Auto Ltd. share price target

Maintain BUY with a SOTP-based TP of Rs 3771 (18x 20E Core EPS + cash + 30% discount for KTM stake) vs 3598 earlier. Bajaj Autos (BJAUT) 3Q EBITDA at Rs. 12.3bn (+18% YoY) with margin at 19.3% (-127 bps YoY/-40 bps QoQ) was below estimates owing to adverse 2W mix (higher share of CT and Platina). Net revenue at Rs 63.7bn (+26% YoY) driven by 18% volume growth and 7% increase in net realization (higher 3W and export).

New launches and export recovery to drive growth Q3 FY18 in line with expectations Bajaj Auto posted better than expected numbers at the topline as 17.6% yoy growth in volumes and 1% rise in realisations led to an 18.7% growth at the top line. This was on the back...

Favorable mix drives realization growth of ~4% QoQ: Net sales increased25.7% YoY (-3.2% QoQ) to INR63.7b (est. of INR62.1b), as volume grew 17.6%YoY (-6.5% QoQ). Realization improved by 3.6% QoQ (+6.9% YoY) to INR63.6k(est. of INR62k) due to a favorable mix (higher share of 3W, exports). EBITDA margin miss led by higher CSR, one-time expense: EBITDA grew 18%YoY to INR12.3b (in-line), implying an EBITDA margin of 19.3% (-130bp YoY, -40bp QoQ; est. of 20%). Higher CSR spend (INR280m) and one-time expense related to new SAP licenses (INR200m) resulted in higher-than-estimate do the rexpense, driving an operating performance miss. Lower other income (due to MTM loss of INR800m) and consequently a higher tax rate (31% v/s est. of29%) restricted PAT to INR9.5b (+3% YoY, -14% QoQ; est. of INR10.5b)

Bajaj Auto had a tough last 5-6 years due to weakness in exports and domestic 2Ws. Consequently, even after 7% volume growth in FY18 (to ~3.9 mn) its volumes are 8-10% below FY12/13 levels.

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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....