Bajaj Auto - 4QFY2015 Result Update - Angel Broking

Results beat estimates on strong operating performance: Bajaj Auto (BJAUT)'s 4QFY2015 results adjusted for one offs have come in ahead of our estimates owing to robust operating performance despite volume degrowth and high competitive intensity.

Revenues declined 4% yoy to Rs. 4,739cr but were better than our estimate of Rs. 4,519cr. Volumes dipped 16% yoy on account of double digit decline in both the domestic (on account of subdued industry volumes and market share loss) as well as export markets (due to political events in key markets). Lower volumes were significantly offset by strong growth in realization by 14%. Better product mix coupled with higher INR/USD realization boosted the top-line. Operating margins adjusted for one time provision of Rs. 66cr on account of increase in gratuity provisons and fire at Akrudi plant stood at 19.1% as against our estimate of 18.9%. Adj EBIDTA, at Rs. 904cr, beat our estimate of Rs. 853cr. Given the robust operating performance, the Adj Net Profit came in at Rs. 666cr, ie ahead of our expectation of Rs. 611cr.

Outlook and valuation: The domestic two wheeler industry is likely to remain under pressure in FY2016 on back of slowdown in the rural demand on account of unseasonal rains which has led to crop damage. BJAUT, however is expected to outperform the industry and regain market share on back of new launches across the motorcycle segment viz commuter, executive and premium. Further, higher INR/USD realization is likely to offset most of the margin pressures on account of competitive pressures in the domestic industry and higher proportion of low margin entry level bikes. We expect BJAUT to report revenues and PAT CAGR of 17% and 19% respectively over FY2015-2017 period. Given the recent surge in the stock price, we find limited scope of appreciation from the current levels. Thus we assign Neutral rating on the stock with fair value of Rs. 2,404.

Shares of BAJAJ AUTO LTD. was last trading in BSE at Rs.2203.55 as compared to the previous close of Rs. 2216.2. The total number of shares traded during the day was 36385 in over 1706 trades.

The stock hit an intraday high of Rs. 2234.45 and intraday low of 2191. The net turnover during the day was Rs. 80599451.

Source : Equity Bulls

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