Result Analysis – Bajaj Auto Ltd.

 Result Highlight: 

• Bajaj Auto Ltd Consolidated Revenue rose96% QoQ and 1.27% YoY to ₹ 9021.65 crore. Other income rose 9.22% QoQ to ₹347.66 Crore.

• Company reported EBITDA at Rs. 1405 cr with margins of 15.57%; Employee cost as % of revenue is 66.92%.

• Net profit saw a degrowth of 21.98% YoY to ₹ 1214 crore for the December quarter compared with ₹ 1556 crore in the same quarter last

• In the domestic motorcycle market, industry recorded a decline of 23% over Q3 / FY21. In contrast, Bajaj Auto fared marginally better recording sales of over 469,000 units, a decline of 20%. Market share improved to 19.2% in Q3 / FY22 as against 18.6% in Q3 / FY21 and 18.1% in FY21.

• In the domestic commercial vehicle market, industry recorded a growth of 5% over Q3 / FY21. In contrast, Bajaj Auto recorded a growth of 52% and reported market share of71%, continuing its leadership position across the three product categories in this segment.

• Exports continue to record strong sales with average monthly volumes in excess of 219,000 units. For the calendar year 2021, exports, by volume exceeded 2.5 million units – highest ever.

Management commentary: 

• Management said demand remain muted in festival seasons, and January demand in muted, no rival is seen in near future but the demand for export is very strong.

• As the inflation is rising there is lack of purchasing power evident.

• Management said they remain cautiously optimistic about demand recovery. In these times of uncertainty and unprecedented input cost inflation.

• Management said CNG pump is up 60% and in the 3W there is market share is 70%.

• Inventory level very much in control and said Q4 will be very good.

• Company has already given application for the PLI.

• Most of the new platform are going to EV platform and only one platform based on ICs.

• Company said Booking of cheetak is very strong.

OUTLOOK

Bajaj Auto Q3FY22 result was above street expectation in term of revenue, margin and profit basis , Revenue grew 1.27% and PAT saw a degrowth of 21% at ₹ 1214 crore, EBITDA margin was lower by 20% at 15.57% . Company has manage margin well, as there raw material cost has moved up sharply, Bajaj auto has gained market share in 2W and 3W segment and are expected to launch new products in coming quarter, management is quite confident of electric vehicle and said demand for cheetak is good , but demand in Indian market is not that great as prices of petrol is rising but demand for export is very strong. On margin front management said margin has bottom out. We believe margin will improve in coming quarter. At the CMP of ₹3308, Bajaj Auto is trading at PE multiple of 20x. Valuing the company at 22x FY23E EPS, we recommend buy on Bajaj Auto at CMP of for the Target Price of ₹ 3850.

Source: BSE, Bloomberg Quint, EW Research

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