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Published on 4/07/2020 12:48:49 PM | Source: Motilal Oswal Financial Services Ltd

Neutral Bajaj Auto Ltd For Target Rs. 2811 - Motilal Oswal

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Above est. at 278k, implying decline of 31% YoY

Domestic volumes / Exports down ~34% YoY / ~27.6% YoY

* BJAUT’s wholesales declined ~31% YoY to ~278k units (our estimate: 233.8k).

* Domestic volumes were down ~34% YoY to ~151.2k units (our estimate: 128.6k), and exports decreased ~27.6% YoY to ~126.9k units (our estimate: 105.2k).

* Motorcycle volumes declined ~27% YoY to 255k units. Domestic motorcycle dispatches were down ~26% YoY to 146.7k units, and exports fell ~29% YoY to ~108.4k units.

* 3W volumes decreased ~57% YoY to ~23k units, with domestic volumes plunging ~85% to ~4.5k units and exports down ~21% YoY to 18.5k units.

* The stock trades at 18x/16.3x FY21/FY22E consol. EPS. Maintain Neutral.

* Mr Rakesh Sharma, Executive Director, Bajaj Auto Limited, stated that demand is being witnessed from both the urban and rural areas, driven by an increasing preference for personal vehicles. Production at the plant and vendor levels has completely geared up, and the company has responded to almost 90-95% of demand, with some hiccups in niche areas such as high-end bikes and electric scooters. In the Exports segment, demand in Africa and South Asia has recovered to 80%, ASEAN is at 60-65%, and LATAM recovery to around 50%. The company expects retail to return to normal levels by July; however, shipments are expected to normalize over Aug-Sept as in-transit stocks are high, and recalibration to the low demand witnessed in 1QFY21 is needed.

 

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