LKP Research's research report on Bajaj Auto
Bajaj Auto Limited (Bajaj) reported Q1 FY25 topline growth of 14% yoy and 3.3% qoq as volumes in the domestic markets were up by 7% yoy on demand uptick seen in both 3W and 2W industry. During the quarter, domestic motorcycles grew by 7% yoy . The growth was due to success of >125 cc bikes, Triumph expansion and Chetak ramp up. Exports grew by 7% as well on a yoy basis as Africa showed slow recovery. Motorcycle exports grew by 6% yoy, while 3W exports grew by 9% yoy as quadricycle sales was opened up in Egypt. Triumph and Chetak also pulled up a good show in Q4 as Chetak gained market share. EBITDA was up by 23.6% yoy to Rs24.1 bn, while margins moved up by 120 bps yoy to 20.2%, and 10 bps qoq. Margins were up mainly on better cost management, operating leverage, improved product mix and stable commodity costs. All other cost items below operating levels remaining more or less range bound, bottomline was 19.4% up yoy at Rs19.9 bn.
Outlook
Margins in the medium-term are likely to draw support from a) favorable mix and b) higher operating leverage. Backed by successful track record of product intervention by Bajaj in the last few years, we remain positive on the stock. We estimate revenue / EPS CAGR of 20% / 24% over FY24-26E. Maintain BUY with TP of INR 10,703 (26x PE). Any hurdles for a good growth in exports remains key to our argument.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
