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Accumulate Bajaj Auto, target Rs 2905: Emkay
Emkay research has maintained accumulate rating on Bajaj Auto with target price of Rs 2905. Bajaj Auto reported its 3QFY08 numbers. While net sales at Rs 25 billion (YoY decline of 2.6%) were below our expectations by 4%, operating performance was much ahead of expectations.
Emkay research has maintained accumulate rating on Bajaj Auto with target price of Rs 2905 in its February 01, 2008 report. "Bajaj Auto reported its 3QFY08 numbers. While net sales at Rs 25 billion (YoY decline of 2.6%) were below our expectations by 4%, operating performance was much ahead of expectations. Operating margins improved by 30 bps to 14.5% YoY against our expectations of 110 bps decline. EBIDTA was flat at Rs 3.6 billion. Improving product mix and control on sales and advertising expenses has driven the operating performance. Net profits stood at 3.3 billion. However, adjusting for the extraordinary expenses the PAT has grown by 3.2% YoY to 36.1.Our SOTP for FY10, based on equity structure post the proposed demerger is Rs 2905. We maintain our ACCUMULATE rating on the stock. We believe that the key trigger in the stock will be an update on the demerger process as there exists a significant value unlocking opportunity in the insurance business as well as clarity on the utilization of surplus investment post demerger," says Emkay research report.
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