Buy Bajaj Auto; target of Rs 4500: ICICI Direct

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ICICI Direct's research report on Bajaj Auto

Bajaj Auto (BAL) reported robust performance in Q3FY21. Net revenues came in at Rs 8,910 crore (up 16.6% YoY), with blended ASPs for the quarter stood at Rs 68,181/unit (up 0.4% QoQ). Total volumes were at 13.06 lakh units, up 8.7% YoY (2-W up 16.2% YoY, 3-W down 35.6% YoY). Reported EBITDA in Q3FY21 was at Rs 1730 crore, with EBITDA margins coming in at 19.4% (up 172 bps QoQ, up 152 bps YoY). The company realised stable gross margins QoQ along with ~100 bps savings in both employee costs and other expenses. Consequent reported PAT was up by 23.4% YoY to Rs 1,556 crore

Outlook

We build 15%, 18.7%, 19.4% volume, sales, PAT CAGR over FY21- 23E. We value BAL at a revised target price of Rs 4,500 using SOTP method (core business at 20x FY23E EPS and 2.5x P/B on KTM investment). We retain our BUY rating on the stock.

For all recommendations report, click here

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