Exports to offset local slowdown for Bajaj Auto: Analysts

Moneycontrol Bureau

Analysts remain bullish on Bajaj Auto, India's second largest two-wheeler maker by sales, saying strong growth in exports, and higher realizations there will offset slowdown in the domestic market.

Pune-based Bajaj Auto reported a lower-than-expected 19% growth in net profit for the third quarter due to one-time losses on foreign exchange hedging. Net sales in the three-month period rose 21.6% from a year ago. However, higher realizations from exports led to EBITDA margin expanding to 21% in October-December.

Here's what some analysts feel on the company's earnings performance in the third quarter and the outlook going ahead:

Brics Securities: We like Bajaj Auto's strong positioning in premium motorcycles, high margins (around 20% and highest in the industry), rising exports (37% of total sales), and high return ratios (we 41% ROCE in fiscal 2013). Rating: Buy. Target: Rs 1,718.

Emkay: Momentum in exports to continue in FY13, outlook for domestic two wheelers subdued. We lower our volume estimates by 3% and 5% in FY12 and FY13 to 4.4 million and 4.9 million units as we factor in lower growth for domestic market. Rating: Buy. Target: Rs 1,920.

LKP Securities: With domestic volume growing by just 7% year-to-date due to demand softness and competition, Bajaj Auto reported a quarter-on-quarter decline of 4% in topline