ICICI Direct recommended hold rating on Bajaj Auto with a target price of Rs 2380 in its research report dated January 31, 2019.
ICICI Direct's research report on Bajaj Auto
Bajaj Auto (BAL) reported a muted Q3FY19 performance Total volumes for Q3FY19 were at 12.6 lakh units (up 26% YoY). Total 2-W sales volumes in Q3FY19 were at 10.8 lakh units, up 32% YoY while 3-W sales volumes were at 1.8 lakh units, down 1% YoY Domestic volume growth was at 38% in the 2-W segment (6.4 lakh units) and -17% in the 3-W segment (0.9 lakh units) Net revenues came in at Rs 7,409 crore (up 16.3% YoY). ASPs in the domestic business were at Rs 61,133/unit while the same in export was at Rs 52,392/unit. Average realised INR:US$ was at 68.9 level Domestic revenues came in at Rs 4,494 crore (up 16.9% YoY) while export revenues came in at Rs 2,749 crore (up 14.5% YoY) EBITDA margins declined 120 bps QoQ to a new low of 15.6%, primarily tracking higher raw material & other expenses. PAT, however, grew 16% YoY to Rs 1102 crore supported by higher other income (Rs 470 crore) and low tax incidence (29.3%).
We value BAL at Rs 2380 using SOTP (13.6x P/E on standalone FY20E EPS of Rs 167.2 + Rs 106 as value of stake in KTM). We have a HOLD recommendation on the stock.
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