Bajaj Auto - Q1FY18 Earnings First Cut - Arihant Capital Markets Limited

Bajaj auto delivered a weak quarter with Net Sales going down. However the international business grew 26%qoq and 10% yoy.

Q1FY18 Earnings Summary

- Net Sales and operating income fell by 5% over Q1 / FY17, operating EBITDA fell by 18% and operating EBITDA margin stood at 18.3% in Q1 / FY18.

The results are to be read in light of the two events that impacted the domestic industry in general and the company in particular.

- Changeover from BSIII to BSIV compliant vehicles and
- Transition to GST

International Business

- Sales volume was 409,525 units as against 324,051 units in Q4 / FY17 & 370,649 units in Q1 / FY17; growth over Q4 / FY17 - 26% and over Q1 / FY17 - 10%.

- Efforts on entering new markets have paid dividends and dependence of the Company on traditional high volume countries like Srilanka, Nigeria, etc has reduced.

- Sales volume mix for high end motorcycles improved to 30% in Q1 / FY18 as against 25% in Q4 / FY17 and 26% in Q1 / FY17.

- Operating EBITDA margin for International Business remains intact.

Commercial Vehicle ( domestic )

- Sales volume was 52,347 units as against 50,037 units in Q4 / FY17 and 75,204 units in Q1 / FY17.

- Volume of 75,204 units in Q1 / FY17 was higher as the same included incremental sale of ~20,000 units from new permits

- Operating EBITDA margin remains intact.

KTM ( domestic )

- Sales volume was 12,984 units as against 8,952 units in Q4 / FY17 and 8,494 units in Q1 / FY17; growth over Q4 / FY17 was 45% and over Q1 / FY17 was 53%.

Motorcycle ( domestic )

- For the period April to October 2016, domestic motorcycle industry grew by 12%. In contrast, for Bajaj Auto, motorcycle sales in domestic market grew by 16%.

- In Q4 / FY17, Company's entire product portfolio for the domestic market was BSIV compliant, resulting in an increase in ex-showroom price. Competition continued to produce BSIII vehicles and supported the sales by offering benefits like free Insurance and other freebies. The comparative price gap in the price sensitive segment was around Rs. 2,500 and Company's market share in this segment slipped in Q4 / FY17.

Going forward, with potential to bring back stock levels within the network, introduction of new variants and steps initiated on mass communication and ground field activities, performance for Q2 / FY18 is anticipated to be much better.

Shares of BAJAJ AUTO LTD. was last trading in BSE at Rs.2815 as compared to the previous close of Rs. 2818.65. The total number of shares traded during the day was 25394 in over 2214 trades.

The stock hit an intraday high of Rs. 2838 and intraday low of 2806.8. The net turnover during the day was Rs. 71599390.

Source : Equity Bulls

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