Bajaj Auto - Cost Control, Favorable Mix Drive Profitability: Prabhudas Lilladher 
A security guard stands in front of a Bajaj Auto Ltd. logo in Pune, India. (Photographer: Adeel Halim/Bloomberg)

Bajaj Auto - Cost Control, Favorable Mix Drive Profitability: Prabhudas Lilladher 

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Prabhudas Lilladher

Bajaj Auto Ltd.’s Q3 FY21 revenues were in-line while there was ~6.6%/6% beat at Ebitda/adj. PAT. This was led by continued tight cost control. Ebitda margins expanded 150bp YoY at 19.4% (PLe 18%) helped by better gross margins at 29.2% (PLe 28.5%) due to favorable mix.

While near term outlook looks positive given

  • healthy exports momentum both for 2W/3W and
  • likely beneficiary of RoDTEP scheme, the same is reflected in valuations.

We raise FY22/23 EPS by 4%/8.6% to factor in for sharp increase in KTM profits and better export outlook.

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