What Brokerages Made Of Bajaj Auto’s Q2 Results

Most analysts hiked target price for Bajaj Auto Ltd. as the two-wheeler maker beat estimates in the quarter ended September on higher other income, better-than-expected operational performance and lower tax expense.

The company’s net profit rose 21.7 percent year-on-year to Rs 1,402 crore in the July-September period, according to an exchange filing. That was aided by a 27 percent jump in other income at Rs 393 crore.

While its Ebitda margin contracted to 16.6 percent from 17.1 percent a year ago, it stayed higher than the estimate of 15.7 percent. The decline was mainly offset by a 9.4 percent rise in realisations, aided by the recent price hikes and improvement in export market dollar realisations.

Here’s what brokerages have to say about Bajaj Auto’s Q2 Results 2019-20:

Citi

• Maintains ‘Sell’ but hikes target price to Rs 2,350 apiece from Rs 2,100.
• Second quarter buoyed by gross margin expansion.
• Margin expansion due to product mix and benign commodity costs.
• Volume recovery is still uncertain.

CLSA

• Maintains ‘Sell’ but hikes target price to Rs 2,800 apiece from Rs 2,525.
• Decent performance in tough times.
• Some improvement in two-wheeler demand, but more regulatory pressure ahead.
• Export growth rates moderating on high base.

Investec

• Maintains ‘Buy’ with a target price of Rs 3,620 a share.
• Higher exports offset pressures due to current slowdown.
• Company expects festive season optimism to continue for customers.
• Export realisations were largely flat year-on-year.

SBI Cap

• Maintains ‘Hold’ with a target price of Rs 2,760 apiece.
• Strong gross margin expansion drives operating performance beat.
• Post festival demand visibility remains weak.
• Further benefit on lower commodities likely in third quarter.
• Expects muted EPS CAGR of 7 percent over FY19-22.