Bajaj Auto Ltd - Q3FY22 Result First cut - YES Securities

Below est led by decade low gross margins at 25.3%, domestic 2W/3W demand recovery and aggressive EV market share gains are key re-rating catalyst

• Revenues grew 1.3% YoY (+3% QoQ) at Rs90.2b as ~10% YoY decline in volumes offset by ~12% YoY growth (flat QoQ) in ASPs at Rs76.4k/vehicle (in-line).
• Gross margins contracted ~390bp YoY (-100bp QoQ) at 25.3% led by RM inflation.
• Consequently, EBITDA declined ~20.7% YoY (-2.1% QoQ) at Rs13.8b (est Rs15.2b) with margins at 15.2% (-420bp YoY/ -80bp QoQ).
• Led by weak op. performance and lower other income at Rs2.7b (-26% YoY/-14.3% QoQ), Adj. PAT declined 22% YoY/ (-4.7% QoQ) at Rs12.1b (est Rs13.5b).
• View - BJAUT's EBITDA/PAT missed our est by ~9% each led by higher than expected impact of RM inflation leading to decade low gross margins at 25.3%. While we expect RM inflation pressure to bottom out, domestic 2W/3W demand recovery and aggressive EV roll-outs are key re-rating catalysts. BJAUT trades at 16x FY23 EPS (v/s 15.2x/22.4x of HMCL/TVSL). We have BUY on the stock with TP of Rs3,798. We shall revise our estimates post call tom.

Shares of Bajaj Auto Limited was last trading in BSE at Rs. 3443.65 as compared to the previous close of Rs. 3400.55. The total number of shares traded during the day was 20012 in over 2031 trades.

The stock hit an intraday high of Rs. 3458.70 and intraday low of 3381.85. The net turnover during the day was Rs. 68763269.00.

Source : Equity Bulls

Keywords

BajajAuto INE917I01010 Q3FY22Results FirstCut YESSecurities