Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Bajaj Auto - Tough quarter; export outlook remains solid - ICICI Securities

Posted On: 2021-07-25 07:20:48 (Time Zone: UTC)


Bajaj Auto's (BAL) Q1FY22 EBITDA margins were below consensus expectations at 15.2% (down 257bps QoQ). BAL's margins were impacted by negative operating leverage (India Covid impact) of 160bps QoQ, off-set partially by higher exports mix (up 14.5% QoQ), higher USD realization (~100bps QoQ benefit). BAL remains a strong beneficiary of robust export demand with unique tailwinds in H2FY22 (e.g. FX depreciation, RoDTEP export incentives) which is likely to aid margins amidst the inflationary environment. New platform and model launches (Sep'21 onwards) is likely to boost domestic growth while most export markets (except ASEAN region which is impacted by covid) continue to witness strong demand momentum. The valuations remain attractive at ~15x PE/ 5% FCF yield on FY23E basis. Maintain BUY.

- Key highlights of the quarter: BAL has reported ~14% QoQ decline in revenue as ASPs were flat at ~Rs73.6k/unit supported by mix, price hikes (~2%). EBITDA margin contracted ~257bps QoQ as gross margins declined (118bps), commodity basket rose ~6-7% QoQ while price hikes incurred were only ~1.5-2%. Employee costs (up 132bps) also rose due to regular increments and higher employee policy premiums for Covid. BAL has reported PAT of ~Rs10.6bn (down 20% QoQ).

- Key takeaways from earnings call: Management indicated: a) Second highest exports (~Rs45bn) in Q1 despite key markets in ASEAN still under lockdown due to covid; b) BAL increased its share in 125cc+ segment to 25% from 22% to No.2 position and reached an all-time high market share in 125cc segment in Q1; c) lower operating leverage impacted margins by 160bps while better forex realisations (100bps) and mix impact (30bps) aided margins; d) BAL's strategy on electrification is focused on strong R&D (1500 people team) leading to superior products with strong customer centricity; d) domestic CV demand is gradually picking up (addition of 1k units per month); BAL has 85-90% market share in CNG 3W and management expects EV adoption to have marginal impact on 3W; e) BAL is likely to further witness ~3% QoQ RM cost rise; the company has taken another >1% price hike in Jul'21 along with the ~2% in Q1; and f) tailwinds from improving operating leverage, better forex is likely to aid margins in H2FY22 even as higher domestic sales is hurt gross margins due to unfavourable mix.

- Maintain BUY: BAL is likely to navigate H2FY22 reasonably well as exports growth coupled with positive domestic operating leverage would aid margins. Any announcement on export-focussed schemes (e.g. RoDTEP, PLI) could act as upside triggers for the stock. We tweak our earnings estimates downwards by 2.6%/0.2% for FY22E/23E, respectively, and value BAL at an unchanged multiple of 18x FY23E EPS. We maintain our BUY rating with a revised target price of Rs4,748 (earlier: Rs4,756).

Shares of BAJAJ AUTO LTD. was last trading in BSE at Rs. 3846.75 as compared to the previous close of Rs. 3852.6. The total number of shares traded during the day was 18168 in over 2679 trades.

The stock hit an intraday high of Rs. 3924.8 and intraday low of 3826.45. The net turnover during the day was Rs. 70220700.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

Automobile Sector - Monthly Quick View - Aug'21 - Mixed Performance across Segments - Reliance Securities

Axis Securities initiating coverage on ICICI Securities

Company Update - Minda Corporation - Q1FY22 - ICICI Direct

Quant Pick - PVR Ltd - ICICI Direct

Quant Pick - ONGC - ICICI Direct

Peak in the headline wholesale inflation is behind us - WPI August 2021 - Acuité Ratings

Sansera Engineering - IPO - Strong Outlook with Steady Cash Flow - Reliance Securities

APL Apollo Tubes - Journey from a semi-commodity player to a branded one - HDFC Securities

Nazara Technologies Ltd - Upbeat in medium-term, Uncertain over Long-term - YES Securities

IPO Review - Sansera Engineering Ltd - ICICI Direct

Overall index is still 0.3% lower than the pre-pandemic levels - IIP July 2021

YES SECURITIES on Monthly General Insurance & Mutual Funds Data

India urban logistics spaces expected to cross 7 million sq. ft by 2022: JLL

Neogen Chemicals - Breaking into the next orbit with a bang - HDFC Securities

Gladiator Stocks - Bharti Airtel Ltd - ICICI Direct

Gladiator Stocks - V-Guard - ICICI Direct

Balkrishna Industries - Industry export growth accelerates - ICICI Securities

HDFC Life Insurance - Exide Life Acquisition - Maintain ADD - YES Securities

Gladiator Stocks - Grindwell Norton - ICICI Direct

Gladiator Stocks - Godrej Properties - ICICI Direct

Monthly Auto Volumes - August 2021 - ICICI Direct

Stock Tales - Easy Trip Planners - ICICI Direct

IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

AU Small Finance Bank - Attrition at top level remains key challenge; business momentum sustained in Jul/Aug'21 - ICICI Securities

Gladiator Stocks - State Bank of India - ICICI Direct

Gladiator Stocks - PNC Infratech - ICICI Direct

Vijaya Diagnostic Centre Ltd - IPO Note - YES Securities

Consumer Durables Sector - Lockdown mars performance yet again - Institutional Research Desk at HDFC Securities

75% of the employees today want to be in office at least once a week as compared to 52% in October 2020: JLL

Gladiator Stocks - Safari Industries - ICICI Direct

Gladiator Stocks - Interglobe Aviation - ICICI Direct

IPO Review - Ami Organics Ltd - ICICI Direct

Q1FY22 GDP - 31st Aug 2021 - Acuité Ratings & Research

Avanti Feeds - Higher input prices hurt margins - ICICI Securities

Company Update - Restructuring - Aarti Industries - ICICI Direct

Q1FY22 Company Update - MM Forgings - ICICI Direct

Company Update - Arvind Fashions - ICICI Direct

Zomato - Can margins and multiples surprise? - ICICI Securities

Ujjivan Small Finance Bank - Top management change and lumpy provisioning concern to weigh on valuation in near term - ICICI Securities

Bharat Dynamics - Guided missile systems to drive orderbook and profit growth - ICICI Securities

Economy - Continued accommodation necessary despite inflationary risks: MPC minutes - ICICI Securities

InterGlobe Aviation - Annual report analysis: Liquidity management remains the mainstay in anticipation of traffic recovery - ICICI Securities

General insurance - Health remains dominant growth driver; Strong all-round performance by Bajaj Allianz - ICICI Securities

Earnings Wrap Q1FY22: Resilient earnings, limited impact of second Covid wave - ICICI Direct

Fine Organic Industries Results Review - In-line performance - HDFC Securities

Power Plus Sector Update - July witnessed strong ~10% generation growth - HDFC Securities

Information Technology Sector Update - 'Hit Refresh' - HDFC Securities

Maintain ADD on JK Cement - Healthy performance - HDFC Securities

Maintain BUY on Star Cement - Margin recovers on pricing gain - HDFC Securities

Maintain BUY on Sadbhav Engineering - Long road to recovery - HDFC Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020