Moneycontrol
Apr 20, 2017 04:44 PM IST | Source: Moneycontrol.com

Hold Bajaj Corp; target of Rs 429: Edelweiss

Edelweiss recommended hold rating on Bajaj Corp with a target price of Rs 429 in its research report dated April 17, 2017.

Hold Bajaj Corp; target of Rs 429: Edelweiss

Edelweiss' research report on Bajaj Corp


Bajaj Corp reported inline Q4FY17 revenue and EBITDA (down 2% /12.4% YoY), while PAT came below estimates (down 2.9% YoY) impacted by lower than expected other income. Volumes continued to be subdued due to the lingering after-effect of DeMon - overall volume dip of 6.9% YoY was largely owing to the 7.1% dip in ADHO category and 2.5% drop in Nomarks’.


Outlook


At gross margin level, the company continued to benefit from older inventory bought at benign prices (gross margin expansion of 287bps YoY). But, the 167bps and 455bps YoY rise in staff cost and other expenditure offset this benefit (EBITDA margin fell by 381bps). Implementation of GST, improvement in rural, success of new Nomarks’ strategy and monsoon remain key monitorables. Maintain ‘HOLD’.


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