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Last Updated : Feb 12, 2018 09:02 PM IST | Source: Moneycontrol.com

Hold Bajaj Auto; target of Rs 3399: Edelweiss Securities

Edelweiss Securities is bullish on Bajaj Auto has recommended Hold rating on the stock with a target price of Rs 3399 in its research report dated February 5, 2018.

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Edelweiss Securities' research report on Bajaj Auto


Bajaj Auto’s (BJAUT) Q3FY18 EBITDA, at INR12bn (up 18 YoY), came 7% below estimate due to commodity cost pressure.  Domestic two-wheeler volume outlook remains positive driven by market share gains; however, we estimate subdued growth in three wheelers post a strong FY18 driven by new permits. Exports outlook is improving with traction in new/nascent markets as well as volume recovery in Nigeria (already clocked peak retail sales of ~35K).

Outlook

We estimate volume/EPS CAGR of 11%/14% over FY18-20. Despite weak volumes in the past two years, BJAUT has clocked ~20% margin, ~25% RoE and strong FCF. Key potential stock triggers are faster uptick in export markets and recently launched Discover gaining acceptance in domestic market. We maintain ‘HOLD/SU’ with TP of INR3,399. At CMP, the stock trades at 19.1x and 16.7x FY19E and FY20E EPS, respectively.

For all recommendations report, click here


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First Published on Feb 5, 2018 08:47 pm
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