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Research
Bajaj Auto Ltd. - Quarterly Result Update - Ventura
Posted On : 2012-05-22 10:50:41( TIMEZONE : IST )
Exports and new launches to lead growth...
Outlook
With the outlook for two wheeler sales remaining subdued, the management has guided for an industry growth of 10% for FY13, with growth gaining momentum in the second half of FY13. BAL expects the volumes to reach 5 million units in FY13 aided by new launches and favourable exports. At a CMP of Rs. 1,533 the stock is trading at 12.5x and 11.4x its estimated earnings for FY12 and FY13 and we recommend a HOLD on the stock.
Key Takeaways
Bajaj Auto Ltd's (BAL) net sales were higher by 21.6% yoy to Rs. 4,840 crore led by higher export volumes and realizations. Operating profits posted a growth of 14.6% and stood at Rs. 920.6 crore and margins witnessed an improvement of 40 bps yoy and stood at 19.8% aided by lower employee cost due to lower actuarial liability. Consequently, earnings excluding the exceptional items were higher by 12% yoy at Rs. 759 crore.
Domestic motorcycle volumes for the quarter remained flat at 6,16,516 units as compared to 6,17,255 units in Q4FY11. Motorcycle exports however continued the robust performance and were higher by 28% yoy at 2,80,732 units. Commercial vehicle sales were higher by 8% yoy at 1,19,919 units which were also aided by a 18% yoy growth in exports. Despite, domestic commercial vehicle sales registering a de - growth of 3% yoy, BAL continues to dominate the alternate fuel passenger segment with 88% market share.
Net sales for the full year rose by 18.8% yoy to Rs. 18,880.3 crore which were also aided by the exemplary export performance by the company. Export realizations for the full year were higher by 45% and stood at Rs. 6,604 crore, whereas domestic realizations posted a muted growth of 8% to Rs. 13,533 crore. Operating profits stood at Rs. 3,720 crore (+17.3% yoy) whereas margins fell marginally by 30 bps to19%. Earnings for the full year were lower by 10.1% to Rs. 3,004 crore. However, excluding the exceptional item of Rs. 724.6 crore for FY11, earnings were higher by 14.8%.
BAL which exports ~10,000 three wheelers and ~12,000 two wheelers to Sri Lanka, expects volumes to be impacted by a fourth due to the increase in import duty by Sri Lanka. Further, the management has guided that the increase in end price to the consumer on account of the import duty hike is 32% and 29% in case of three wheelers and two wheelers respectively.
BAL is going to launch the new pulsar 200 NS in the current month and the Discover 125 ST in the next month and is banking on these new launches to drive growth in the current fiscal. Further, BAL remains cautious on three wheelers sales as the new permit sales take time to materialize. Further, the commercial vehicle RE 60 is expected to be launched by the end of FY13.
Out of the Rs. 800 crore of VAT refunds due, an order for Rs. 200 crore has been signed and the management does not expect to receive the remaining before October'12.
