Motilal Oswal has come out with its third quarter (October-December) earnings estimates for the automobile sector. The brokerage house expects Bajaj Auto to report a 3.9 percent growth quarter-on-quarter (up 6.2 percent Y-o-Y) in net profit at Rs 869.6 crore.
Sales of Bajaj Auto are expected to increase by 0.8 percent Q-o-Q (down 3.6 percent Y-o-Y) to Rs 5216.8 crore, according to Motilal Oswal.
Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 1.7 percent Q-o-Q (up 9.9 percent Y-o-Y) to Rs 1,112.4 crore.
Motilal Oswal's Report on Bajaj Auto:
Expect 3QFY14E volumes to decline 13.5 percent Y-o-Y (+1.5 percent Q-o-Q) to 0.98m units. Sequential growth is driven by seasonal pick-up in domestic demand during the festive season.
EBITDA margin to decline 60bp Q-o-Q (+260bp Y-o-Y) to 21.3 percent, driven by unfavorable mix on higher share of Discover M (100cc motorcycle) and lower share of high margin 3W volumes (from 11.6 percent to 10.6 percent), partially offset by favorable export realisations (2Q realisations stood at 60.9/ USD).
Expect PAT to rise 6.2 percent Y-o-Y (+3.9 percent Q-o-Q) to INR 8.7 billion. We downgrade FY14E/FY15E EPS by 4.1 percent/4 percent as we cut our volume assumptions on continued weakness in demand, particularly in the standalone business.
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