Emkay Global Financial's report on Bajaj Auto
In an interaction with Emkay, new CFO Mr. Dinesh Thapar reiterated expectations of a strong recovery in domestic 2Ws and an aggressive focus on EVs. He expects domestic 2W recovery from FY23E onward, with signs of a demand pickup in rural, student and salaried segments. BJAUT is focusing on the EV space and has planned a slew of launches in 2Ws/3Ws across various use-cases over the next 2-3 years. In Jun’22, BJAUT plans to launch an E3W and commission an E-2W plant with an annual capacity of 500,000 units. We expect an 11% CAGR in total volumes over FY22-24E, driven by a recovery in domestic 2W/3W volumes (13%/26% CAGR). We estimate revenue/earnings CAGRs of 15%/18% over FY22-24E, with average FCF generation of Rs32bn.
We maintain Buy with a TP of Rs4,350 based on 17x Jun’24E Core EPS, value of investments at Rs224/share and cash reserves of Rs725/share. Our target multiple is based on a two-stage DCF model.
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