Centrum remains positive on Bajaj Auto post results

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Centrum remains positive on Bajaj Auto post results

In an interview to CNBC-TV18 Sethia said, the company has performed operationally well and he is positive on the stock.

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ALSO READ News and Notices about Bajaj Auto See interviews with Bajaj Auto Management See what other Experts & Brokerages are saying about Bajaj Auto See previous Results of Bajaj Auto

Two-wheeler maker Bajaj Auto's net profit for October-December quarter was up 19% year-on-year at Rs 795.19 crore.

It reported loss of Rs 59 crore on foreign exchange hedging in the third quarter . Ajay Sethia of Centrum feels this loss is notional and one should not be worried about it. In an interview to CNBC-TV18 Sethia said, the company has performed operationally well and he is positive on the stock.

Below is the edited transcript of Sethia's interview to CNBC-TV18. Also watch the accompanying video.

Q: What is your initial take on the numbers that you have seen so far?

A: The overall numbers still look quite good. It is more or less inline with what we have been expecting. The EBITDA margins have come closer to 21% as against our expectation of 20.7%. Net-net the overall result seems to be inline, no major disappointment as such.

Q: There is exceptional provisioning that they have made - valuation loss and derivatives hedging, that wouldn't worry you too much, right?

A: That would be more of notional and could be return back if the exchange rate is favourable. Basically Bajaj Auto tends to take the range cover and we are not worried about that. Operationally they have done quite well.

Q: What is your view on the stock at this point in time?

A: We continue to remain positive on the stock.

Q: What is your target price? What kind of commentary would you want to hear from the management because the results are pretty much inline and in fact the margins have gone to 21% like you said? What would be the key pointers that you would watch for from the management from here?

A: We would be looking forward is the pipeline in terms of the new product launches because they have been talking about new launch. The new product launches would be something which is quite critical to be looking forward to

Q: What do you attribute 1.5% cut that we are seeing in Bajaj Auto in today's trade in a market which is very strong?

A: I don't see a significant reason why the stock is down because operationally the results are good. Going forward, the only issue could be some sort of moderating happening in the motorcycle segment. That is the reason I said new product launches seems to be quite critical.

Q: What is the margin trajectory that you expect considering that you have been surprised with the operational performance this time?

A: I was anyways looking at 20.7% which is marginally higher than my expectations, so I would be looking at closer to 19.5-20 in terms of EBITDA margins going forward.