Dolat Capital Market's research report on Bajaj Auto
Bajaj Auto’s Q2FY21 performance was broadly in line with estimates. Despite 7% YoY fall in revenue, EBITDA remained flat at Rs 12.66bn with margin of 17.7% (+110bps YoY) owing to sharp improvement in domestic 2W business margin (higher share of Pulsar 125 and ultra-premium segment and better FX realization). APAT declined 18% YoY due to lower other income. The management expects volume recovery momentum to continue in 2HFY21, aided by increasing preference for personal mobility, ramp up in export volume and pick up in domestic festival season sales. As per management, Initial cues are indicating an encouraging festive season demand for 2Ws. Inventory for the festival season is at a normal level of 45-48 days. Exports visibility is also improving with highest ever exports in September and expect October and November months sales to beat September numbers, led by strong revival of demand in Latin America and Africa.
We increase our EPS estimates by 2/4% for FY22/23E and maintain an Accumulate rating with target price Rs 3,352 (16x FY23E core EPS + cash + KTM stake).
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