Dolat Capital's research report on Bajaj Corp
A top-line growth of 9.5% could be attributed to a satisfactory 8.7% volume growth (on case basis) but was restricted by poor IB performance. Despite 20% YoY increase in LLP prices, GM improved 150bps driven by better sales mix. EBITDA margins also expanded by 50bps as GM expansion and 150bps decline in other expense was partially offset by 140/100bps increase in employee cost/A&P spends during the quarter. We believe that favourable volume base will enhance performance going ahead. Further improvement in wholesale and CSD channels coupled with price hikes is expected to drive revenue. We have revised our FY19E and FY20E earnings at ` 15.3 and ` 17.1 respectively to factor in Q1FY19 performance.
Outlook
The stock is currently trading at 26.7x and 24.0x FY19E and FY20E earnings. Retain ACCUMULATE with a TP of ` 461 (27x FY20E) considering strong fundamentals and significant valuation discount to its peers.
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