ICICI Direct: Bajaj Auto  Weaker Rupee Lifts Q1 Margin Performance
Bajaj Auto Ltd. Pulsar motorcycles sit ready at the end of the assembly line at the company’s factory in Pune, India. (Photographer: Kuni Takahashi/Bloomberg)

ICICI Direct: Bajaj Auto Weaker Rupee Lifts Q1 Margin Performance

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ICICI Direct Report

Bajaj Auto Ltd. reported healthy Q1 FY21 results. Net revenues came in at Rs 3,079 crore (down 60.3% YoY) tracking higher-than-expected blended ASPs, which were at Rs 69,493 per unit (up 6.9% YoY).

Total volumes were down 64.5% YoY to 4.4 lakh units (two-wheeler volumes 4.0 lakh units, down 63% YoY; three-wheeler volumes 43,174 units, down 73.8% YoY). Total exports were at 2.5 lakh units, down 54% YoY.

Reported Ebitda margins came in at 13.3% (down 511 basis points QoQ) amid gross margin expansion of 130 basis points (including impact of forex gains). Consequent reported profit after tax (PAT) was down 53.1% YoY at Rs 528 crore. At the consolidated level, share of loss from KTM amounted to Rs 132 crore

For Bajaj Auto sales, PAT are expected to be largely flattish on a compound annual growth rate basis in FY20-22E with de-growth in FY21E being followed by healthy growth in FY22E. We value Bajaj Auto at a revised target price of Rs 3,210 using sum of the part method (valuing core business at 18 times FY22E earning per share and assigning 2 times price to book ratio on KTM investment).

We continue to assign Hold rating to the stock. We derive comfort from debt free, cash rich balance sheet, capital efficient business model and robust cash flow generation.

Click on the attachment to read the full report:

ICICI Direct BajajAuto Q1FY21 Result.pdf

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