Neutral Bajaj Auto Ltd For Target Rs.4,150 - Motilal Oswal
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Above est.; volumes decline by 4.3% CAGR (v/s Apr’19) to 388k units (v/s est. 344.3k units)
Export volumes grew 15.2% CAGR (v/s Apr’19), 3W volumes fell 16.4% CAGR (v/s Apr’19)
* BJAUT’s wholesales declined by 4.3% CAGR (v/s Apr’19) to 388k units (v/s est. 344.3k).
* Domestic volumes were in line at 134.4k units (v/s est.: ~140.3k), while exports were above our est. (204k units) at 253.5k units.
* Motorcycle volumes fell 2.5% CAGR (v/s Apr’19) to 348.1k units. Domestic Motorcycle dispatches declined 21.6% CAGR (v/s Apr’19) to 126.5k units, while exports grew 17.5% CAGR (v/s Apr’19) to 221.6k units. We estimate Motorcycle volumes to grow 23.5% in FY22E, implying a residual growth of 14.9%, or a monthly run-rate of ~373.2k.
* 3W volumes declined 16.4% CAGR (v/s Apr’19) to 39.8k units, with domestic volumes down 45.1% CAGR (v/s Apr’19) at 7.9k units. Exports grew 1.8% CAGR (v/s Apr’19) to 31.9k units. We estimate 3W volumes to grow ~62% in FY22E, implying a residual growth of 53.8%, or a monthly run-rate of ~50.5k.
* Mr. Rakesh Sharma, Executive Director, Bajaj Auto, told CNBC-TV18, “We should be able to maintain the export tempo above 0.2m. As I said at the announcement of Mar’21 sales, there was an overflow of some exports into Apr’21 because we closed FY20 a bit early. So, Apr’21 is a bit pumped up because of that overflow, but we are comfortably crossing the 0.2m (units) mark every month in exports and that should continue.”
* On the domestic business, he said, “It does not just depend on its own performance, but on how things shape up in the domestic market because of the progression of the COVID-19 pandemic. May’21 will probably be worse-off than Apr’21. As the pandemic recedes and the vaccination program advances by the end of Jun’21 or early Jul’21, we should start to see some recovery, but that depends on how the pandemic progresses.”
* The stock trades at 18.9x/16.6x FY22E/FY23E consolidated EPS. Maintain Neutral.
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