Emkay Global Financial's report on Bajaj Auto
BJAUT’s Q4 EBITDA declined 10% yoy to Rs13.7bn (est.: Rs11.4bn), but came in above estimates on better sales mix within motorcycles, deferral of material cost increases, one time actuarial gains in staff costs and government incentives. Revenue fell by 7% to Rs79.7bn (est.: Rs76.4bn), above estimates due to better mix and government incentives. We continue to expect a turnaround in the domestic 2W industry in FY23, with 11% growth. Our channel checks indicate that Q1FY23 volumes will see support from festive/marriage season demand as well as a recovery in student demand. We expect an 11% CAGR in total volumes over FY22-24E, driven by a recovery in domestic 2W/3W volumes (13%/26% CAGR). BJAUT is focusing on EVs, with multiple launches in 2Ws/3Ws planned for domestic/overseas markets, R&D collaborations with KTM/Huqsvarna and new capacities under the PLI scheme.
Our FY23E/24E EPS estimates are broadly unchanged at Rs195.5/229.6, and we introduce FY25E EPS of Rs253.9. Maintain Buy with a TP of Rs4,350 (Rs4,250 earlier), based on 17x Jun’24E Core EPS (17x Mar’24E EPS earlier), value of investments at Rs224/share and cash reserves of Rs725/share.
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