Buy Bajaj Auto Ltd Target Rs.5,378 - Sushil Finance
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Highlights from the Quarter (Q3FY22)
Total revenue for the quarter stood at Rs. 9,022 cr, up 3.0% sequentially and 1.3% on a YoY basis. The EBITDA for the quarter stood at Rs. 1,860 cr, translating to an EBITDA margin of 20.6%. The margin dipped by 202 Bps on a QoQ basis and 473 Bps on a YoY basis. Net Income for the quarter stood at Rs. 1,430 cr, down over the corresponding quarter last year as well QoQ, due to an exceptional gain of Rs. 501 cr on account of restructuring of the company’s shareholding in KTM AG in the previous quarter. Consequently, the company has delivered an EPS of Rs. 49.4 for Q3FY22. the company launched new 250cc Pulsar models during the quarter, which have been well received by the market.
The company has derived 56% of its revenue this quarter from the export segment, which has helped offset the weak but recovering domestic demand. During the quarter, the company sold 4,71,284 motorcycles domestically, 5,77,261 motorcycles in the export markets. On the Commercial Vehicles front the company sold 52,015 CVs domestically and 80,801 CVs in the export markets.
The management spoke extensively about the EV segment and their plans for the same. The company has announced an investment of Rs. 1,000 cr over the next 5 years for the EV business. The first leg of investments is already underway with an investment of Rs. 300 cr to set up the EV facility at the Akurdi plant. This will give Bajaj Auto an additional EV capacity of 5 lakh units per annum.
OUTLOOK AND VALUATION
Bajaj Auto’s results were in line with our estimates. There has been a recovery on the volumes front for both 2W and 3W segments for the quarter. We keep our estimates unchanged and maintain our forecasts for Bajaj Auto. We maintain BUY on Bajaj Auto for a target price of Rs. 5,378, which is an upside of ~63% from current levels over an investment horizon of 24-30 months.
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