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Bajaj Auto Ltd. | Q3FY13 First Cut Analysis | In line street expectations




IndiaNivesh Securities Pvt Ltd


16 Jan 2013





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Bajaj Auto Ltd. | Q3FY13 First Cut Analysis In line street expectations Bajaj auto reported Q3FY13 numbers (Standalone) were in line with street expectation. Revenue increased by 9.7% Y-o-Y and 10.2% Q-o-Q to Rs. 53.07 bn (slightly below consensus of Rs. 53.79 bn) led by 5% YoY and 7% QoQ growth in volume. Volume growth was driven by strong growth (10%YoY and 17% QoQ) in three wheeler sales. The company also witnessed 4% Y-o-Y and 6% QoQ increase in two wheeler volumes. Average net realization improved by 2.5% q-o-q and 4.5% y-o-y to Rs 47,060 on the back of better product mix. EBITDA margin improved by 7 bps q-o-q to 19.1% (slightly below. consensus of 19.3%) on the back of higher 3 Wheeler sales and greater contribution of executive/premium segment motorcycles (driven by recent launches in like Discover ST 125 cc motorcycle and the Pulsar 200 NS). However YoY basis margin contracted by 287 bps led by lower export volume. Reported PAT increased by 3% YoY and 11% QoQ to Rs. 8.18 bn on account of higher other income. Valuation: At CMP of Rs 2082, the stock is trading at PE of 19x FY13E which is above its mean of 17 times. Bajaj Auto’s return ratios and cash flow generation remain one of the best in the industry. However, considering moderation in the 2 wheelers volumes due to macro headwinds and impact of duty hike in Sri Lanka on exports, we believe such premium valuation is not sustainable going ahead. We have a neutral view on the stock. We will come out with detailed analysis after the conference call scheduled for 17th January, 2013.

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