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Research
Bajaj Auto - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-05-21 11:09:15( TIMEZONE : IST )
Bajaj Auto (BJAUT) reported below expectations results for 4QFY2012 mainly on account of lower-than-expected top line, which was impacted due to a sequential drop of 5.2% in exports realization. BJAUT also reclassified certain operating and non-operating income items due to which the company's EBITDA margin is not comparable to our estimates. We broadly retain our volume, revenue and earnings estimates for FY2013/14 and maintain our Buy rating on the stock.
Lower-than-expected operating performance: BJAUT reported lower-thanexpected top-line growth of 12.2% yoy (down 6.7% qoq) to Rs.4,651cr, driven by 7.3% yoy (down 5.4% qoq) growth in volumes and a 3.3% yoy (down 1.4% qoq) increase in net average realization. Volume performance was led by robust growth on the exports front, with volumes growing by 25.9% yoy (down 8.8% qoq). Domestic volume growth, however, continued to remain muted and declined marginally by 0.4% yoy (3.6% qoq) during the quarter. Realization on the exports front declined by 5.2% yoy, largely on account of lower share of three-wheelers in overall exports and lower USD realization rate. Reclassified EBITDA margin expanded by 41bp yoy (flat qoq) to 19.8%, primarily benefitting from the decline in raw-material expenses, which as a percentage of sales declined by 60bp yoy (20bp qoq). As a result, operating profit witnessed 14.6% yoy growth (down 6.5% qoq) to Rs.921cr. Adjusted net profit, however, rose by 11.2% yoy (down 12% qoq) mainly on account of lower-than-expected top line, higher depreciation expense (up 44.5% yoy) and higher tax rate (25.4% vs. 15.3% in 4QFY2011).
Outlook and valuation: We continue to maintain our positive view on BJAUT owing to its diversified business model and attractive valuations. Further, three new launches (Discover 100cc, Discover 125cc and Pulsar 200cc) in domestic markets are expected to lend volume momentum going ahead. At Rs.1,574, BJAUT is trading at attractive valuations of 12.4x FY2014E earnings. We maintain our Buy rating on the stock with a target price of Rs.1,835.
