Neutral Bajaj Auto Ltd For Target Rs. 5,150 - Motilal Oswal Financial Services
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Export volumes on a slow recovery; Nigeria retails improving
* Sep’23 wholesale volumes remained flat YoY at 392.6k units (est. 380.2k units). ? Domestic volumes were also flat YoY at 253.2k units (est. 239k units).
* Motorcycle volumes declined 6% YoY to 327.7k units (est. 324.1k units). Domestic motorcycle volumes fell 9% YoY to 202.5k units, mainly due to supply chain issues.
* Motorcycle export volumes remained flat YoY at 125.2k units.
* We estimate 9% YoY growth in motorcycle volumes in FY24, implying a monthly run rate of 330.1k units.
* 3W volumes grew 40% YoY to 64.85k units (est. 56k units). Domestic volumes grew 60% YoY to 50.7k units. Exports declined 3% YoY to 14.2k units. We estimate 3W volumes to grow by ~32% YoY in FY24.
* In an interview to CNBC-TV18, Mr. Rakesh Sharma, Executive Director, BJAUT, said, “The export story is one of slow recovery and we were also not expecting a rapid recovery. It is more like limping back to normalcy. 1Q was about 128,000 average per month for us and 2Q is 10% better at 140,000. But even after all that, retails in Nigeria crossed 30,000 units for us last month. So that was good, so some improvement over there. I would say that the Chinese have, in the last few months on the back of very cheap products, which have sort of made a comeback in these difficult times, they have put a constraint on growth in our market share.”
* The stock trades at 18.5x/16.4x FY23E/FY24E consolidated EPS. We maintain our Neutral rating
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