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In-line; 2% volume CAGR decline (v/s Jul’19) to 369k units

3W posts 19% volume CAGR decline (v/s Jul’19)

* BJAUT’s wholesales posted a 2% CAGR decline (v/s Jul’19) to 369k units (v/s est 370.2k units), +44% YoY / +7% MoM.

* The domestic biz posted a 10% volume CAGR decline (v/s Jul’19) to 167.3k units (v/s est 167.9k units), +5% YoY / +3% MoM.

* Motorcycle posted a 1% volume CAGR (v/s Jul’19) to 330.6k units (v/s est 332.3k units), +39% YoY / +6% MoM. Domestic Motorcycles posted a 4% volume CAGR decline (v/s Jul’19) to 156.2k units, +2.5% YoY / flat MoM.

* Exports posted a 7% CAGR (v/sJul’19) to 174.3k units, +103% YoY / +12.5% MoM.

* We estimate motorcycle volumes to grow ~19% in FY22E, implying a monthly run-rate of 383.7k units.

* 3W posted a 19% volume CAGR decline (v/s Jul’19) to ~38.6k units, +123% YoY / +8% MoM. The domestic biz posted a 43% volume CAGR decline (v/s Jul’19) to 11k units, +70% YoY / +78% MoM. Exports posted a 5% CAGR to 27.5k units, +155% YoY / -6% MoM. We estimate 3W volumes to grow ~54% in FY22E, implying residual growth of 37% or a run-rate of ~53k.

* Mr Rakesh Sharma, Executive Director, Bajaj Auto, stated on CNBC, “It is a more step by step staged recovery that we are seeing and the great thing is that it is evenly spread out. The southern part of the country is yet to catch up on the recovery and that should start in August three-wheeler business for the company stepped up in July.

* The retail numbers, which were around 7000 in June went up to 12000 in July, he mentioned further, adding that although it is not as widespread as motorcycles, it does give a good view of what is happening on the ground. So, things are improving month on month August is where retail starts moving up further because mini-festive occasions start to build up in Maharashtra, southern parts etc. So, I think August will be better but I would not place my bets on sales numbers.”

* On exports, he commented, “Most countries are striking a better balance between livelihood and life. So, apart from Asian region, where Philippines and Cambodia are important to us and also Nepal, these countries are weighing the performance down but other than that, Latin America, Africa, and Middle-East have moved on and on the basis of that, we see export outlook maintaining the same tempo. Over the next few months, if Philippines, Cambodia start to return, it should give a boost in exports but that depends on how COVID progresses over there.”

* The stock trades at 19.6x/16.9x FY21/22E consol. EPS. Maintain Neutral.

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