KR Choksey is bullish on Bajaj Auto has recommended buy rating on the stock with a target price of Rs 3484 in its research report dated May 21, 2019.
KR Choksey's research report on Bajaj Auto
In Q4FY19, Bajaj Auto reported total revenue from operations of INR 7,395 Cr, a growth of 9% YoY (down 0.2% QoQ) slightly above our estimates of INR 7,221 Cr. Volumes increased 14% YoY (down 5% QoQ). EBITDA margin contracted by 370 bps YoY to 16% (+12 bps QoQ) indicating margin pressures due to increase in cost of materials consumed. EBIT decreased by 10% YoY to INR 1,101 Cr (+0.7% QoQ) and EBIT margins expanded by 15 bps sequentially. Overall, Net Profit increased by 30.4% YoY to INR 1,408 Cr (+27.8% QoQ) with NPM at 19.5% (+428 bps QoQ/+326 bps YoY). The Board of Directors recommended a dividend of INR 60 per share for FY19.
We apply a P/E multiple of 17.4x on FY21E EPS of INR 200 to arrive at a target price of INR 3,484 per share; an upside potential of 15.9%. Accordingly we rate the shares of Bajaj Auto a “Buy”.
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