KR Choksey's research report on Bajaj Auto
For Q2FY21, Bajaj Auto reported total revenue from operations of INR 7.041 Cr, degrowth of 6.1% YoY (up 138.8% QoQ). Domestic Volumes declined by 9% YoY at 573,586 units whereas Export volume declined by 20% YoY at 479,751. EBITDA margin expanded 93 bps YoY to 18.0% (+539 bps QoQ). Net Profit de-grew by 18.9% YoY to INR 1,138 Cr. (+115.7% QoQ) attributed to reduction in treasury income coupled with one-time gain noted in last year’s Net Profit. Net profit margin contracted 255 bps YoY/173 bps QoQ to 16.2%. In Q2FY21, the company introduced Pulsar 125 Drum Split Seat and expanded the footprint of Pulsar 125 Disc Split Seat. Further refreshed versions of Platina 100 ES and Duke 50 were also introduced.
Hence, we reduce a P/E multiple of 18x (earlier, 19x) on FY22E EPS of INR 179.8; to arrive at a target price of INR 3,236 per share; implying an upside potential of 11.8% from CMP. Accordingly, we reiterate an “ACCUMULATE” recommendation on the shares of Bajaj Auto.
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