Bajaj Auto Q4 Results Review - Positives Largely Factored In Rich Valuations, Maintain Hold: Axis Securities

Axis Securities Report

Bajaj Auto Ltd. reported a strong set of results in Q4 FY24. Revenue stood largely in line with our estimates with a ~3% beat at Rs 11,178 crore, up ~29.5% YoY (down ~5.5% QoQ) led by ~27.6%/19.2% volume YoY growth in domestic/exports market respectively.

Average selling price (~3.2% beat) grew by ~4.3%/6.2% YoY/QoQ. The YoY growth in the ASP was led by product premiumisation, higher sales of three-wheeler in the product mix and a ramp-up in electric vehicle sales. Ebitda grew by ~34.4% YoY (down ~5.5% QoQ) to Rs 2,306 crore, a ~5.1% beat versus our estimates, led by better gross margins and lower employee costs.

Ebitda margins stood impressive at 20.1%, up ~80/02 bps YoY/QoQ versus our estimates of 19.6%, led by higher operating leverage absorbing the drag from the dilutive electric scooter business.

Profit after tax at Rs 1,936 crore grew by ~35% YoY (down 5.2% QoQ), in line with Ebitda growth.

Outlook:

We model 14.5% compound annual growth rate volume growth over FY24-26E as we expect a recovery in exports and higher domestic sales. We maintain over ~20% Ebitda margins for FY25/26E.

The key risk will be the failure of actual exports to pick up from H2 FY25 onwards and the increase in raw material costs in the near term.

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