Bajaj Auto Q1 Review - Higher Raw Material Cost Keeps Margin Under Pressure: Motilal Oswal
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Motilal Oswal Report
Bajaj Auto Ltd.’s Q1 FY22 performance was impacted by high raw material and employee cost.
While core business recovery is ahead of the market, its ramp-up in electric vehicles would be a key monitorable as the inflection point for EVs comes closer.
Higher dividend yield will provide a floor to valuations.
Bajaj Auto's revenue/Ebitda/profit after tax grew 140%/174%/101% YoY (down 14%/down 26.5%/down 20% QoQ) in Q1 FY22.
Realisations grew 5.6% YoY (flat QoQ) to Rs 73,400 (estimate- Rs 72,800), led by a price hike of 1.5% QoQ, favorable forex (1%), and mix.
Gross margin declined by 110 basis point QoQ (down 590bp YoY) to 27% (estimate- 27.4%) due to cost inflation of 3.7%, but diluted by a price hike and favorable forex.
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