Accumulate Bajaj Auto - 1QFY2013 Result Update - Kotak

- BAL's 1QFY13 results came in below expectation at the operating profit level leading to lower than expected PAT.

- Revenues during the quarter increased by 3.4% YoY and PAT was higher by 1%. However, over 4QFY12, PAT declined on account of steep drop in EBITDA margins.

- Reasons for QoQ dip in EBITDA margins include 1.Adverse product mix 2.Input cost pressure and 3.Increase in employee cost.

- We expect the performance of the company to improve over the next few quarters on back of 1.Gradual pan India roll-out of new launches 2.Recovery in export markets like Sri Lanka 3.Price hike taken in July 2012 in domestic markets and 4.Expected improvement in domestic 2W demand.

- We retain our price target of Rs1,610 and continue to rate the stock as ACCUMULATE.

Source : Equity Bulls

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