Motilal Oswal's research report on Bajaj Auto
BJAUT’s 2QFY24 EBITDA margin beat our estimate at 19.8% (+260bp YoY, est. 19.2%), led by favorable RM costs and a better product mix (high 3W contribution). The domestic 2W industry is likely to grow 12-15% YoY during the festive season. A sequential recovery in exports and healthy demand in 3Ws should lead to a healthy operational performance. Change in dividend policy: BJAUT is now exploring multiple routes to pay shareholders, including dividends and buybacks. The new slab for the dividend payout for over INR150b surplus funds is now >70% (v/s 90% as per old policy). We maintain our FY24/FY25 estimates. At 18.6x/16.6x FY24E/FY25E consolidated EPS, the stock’s valuation fairly reflects the expected recovery as well as the risk of EVs. We reiterate our Neutral rating with a TP of INR5,225 (based on 16x Sep’25E Consolidated EPS).
Outlook
At 18.6x/16.6x FY24E/FY25E consolidated EPS, the stock’s valuation fairly reflects the expected recovery as well as the risk of EVs. We reiterate our Neutral rating with a TP of INR5,225 (based on 16x Sep’25E Consolidated EPS).
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