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Research
Bajaj Auto - Slowdown continues... - JHP Securities
Posted On : 2012-05-25 10:04:00( TIMEZONE : IST )
BAJAJ AUTO Q4FY12 results came more or less on expected lines. Net sales for the quarter stood at INR 46514 mn (up 10.7% YoY and down 8.1% QoQ). Volume growth for quarter stood at 1017,167 units (up 7.3% YoY and down 5.5% QoQ). Realization for the quarter stood at INR 45,729 (up 3.2% YoY and down 2.8% QoQ). Going forward we expect Bajaj market share in executive segment to recover with the launch of new discover. We remain bearish about 2W industry growth in H1 FY13 due to number of unfavorable macro factors. However export market for Bajaj will continue to outperform domestic market with increase in realization on account of weakening of rupee.
EBITDA: EBITDA for the quarter stood at INR 9206 mn (up 6.9% YoY and down 13.3% QoQ). OPM at 19.8% (down 70 bps YoY and 120 bps QoQ) was mainly driven by increase in other expenses commodity prices. Employee cost for the quarter remained lowered at INR 1,196 mn (2.6% Vs 3.1 of net sales) due to revaluation of full year gratuity at INR 130 mn.
Net Profit: PAT for the quarter stood at INR 7720 mn (up 14.2% YoY (Adj.) and 2.9% QoQ). NPM at 16.6% was up by 50 bps YoY and 90 bps QoQ. Extraordinary income includes INR 203 mn due to write off of MTM losses on account of hedges taken by the company. Gross yield on treasury investments in 4QFY12 stood at 9.8%. Depreciation increased sharply by 44.5% YoY INR 434 nmn due to onetime write off of INR 140 mn. Tax rate for the quarter was at 25.4% Vs 25.1% in last quarter.
VALUATION & RECOMMENDATION: We expect unfavorable macro factors will have negative impact on consumer spending pattern. Higher interest rates and fuel prices continue to drag auto demand in rural as well as urban areas. We expect domestic and export demand will remain under pressure in H1FY13. However, we expect H2FY13 to show higher growth than H1. We expect Bajaj Auto to volumes to improve gradually on account of new launches and expected demand recovery in Sri Lanka and other export market. We remain cautious on 2W for near term however long term story of Bajaj Auto is still intact. We reduced our target price for Bajaj from INR 1660 to INR 1,612 and give "HOLD" rating on the stock.
