Bajaj Corp - Robust 4Q rounds up a solid FY2013; we reiterate our positive stance - Kotak

Bajaj Corp. reported a robust 4QFY13 with 25%, 53% and 44% growth in net revenues, EBITDA and PAT, respectively. We remain positive on the sustenance of robust volume growth story for the company; RM softness and price hikes taken in April 2013 should aid FY2014E EPS growth further. We broadly maintain our revenue and EBITDA estimates for FY2014/15E. Our PAT estimate for FY2015E goes up by 11.5% as we factor in lower-than-earlier-assumed ETR.

Reiterate BUY with an unchanged TP of Rs280/share

We broadly maintain our revenue and EBITDA estimates for FY2014/15E. Our EPS estimate for FY2015E goes up by 11.5% on the back of downward revision in our ETR assumption; we had earlier factored in a steep increase in ETR in FY2015E as certain units move out of 100% tax exemption to 30%; however, the management clarified that it has MAT credit available (the company chose not to create deferred tax assets or MAT credit on the balance sheet but these are available to the company) and hence ETR would not go up towards the marginal tax rate for the next 3-5 years. Our revised EPS estimates are Rs13.7/share and Rs16/share for FY2014E and FY2015E, respectively. We reiterate BUY with an unchanged target price of Rs280/share (20.5X implied FY2014E PE multiple).

Source : Equity Bulls

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