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BJAUT reported strong performance that was in-line, with margins sustaining QoQ at 20.1% (Emkay est.: 20.4%). Domestic 2W recovery continues apace, even as revival in exports is expected to be slightly gradual. BJAUT is improving its positioning in the growing 125cc category, while also ramping-up well in E3Ws (already has 60% share in some markets). However, amid the sharp runup in the stock price (valuations well above 1SD from LTA), we retain REDUCE, with revised TP of Rs7,900/share (23x core FY26E multiple + Rs800 cash/investment per share; upward revision on healthy positioning in E-3Ws, thereby restricting disruption threat to the high-margin 3W franchise. We buildin 12%/8% volume/EPS CAGR over FY24-26E. We still prefer TVSL in 2Ws (similar business model with bottom-up share gains, margin triggers).

Strong performance; in-line results

Revenue rose 29% YoY to ~Rs114.8bn, amid 25% YoY higher volumes, with realization lower 6% QoQ. EBITDA margin was stable QoQ at 20.1%; lower RM sequentially was offset by higher other expenses on operating de-leverage. Consequently, adjusted PAT rose ~35% YoY to ~Rs19.3bn. BJAUT declared final dividend of Rs80/share for FY24.

Earnings call KTAs

1) Domestic 2W industry is expected to grow at 7-8% p.a. amid improving consumer sentiment; here, BJAUT aims to continue outperforming via new product introduction (e.g. upcoming big bike Pulsar; impending CNG motorcycle launch, which stretches the addressable market to mileage-conscious consumers; currently, the segment size is ~600K units/mth). 2) In export markets, macro challenges persist in most geographies, albeit at a lower level now; BJAUT remains cautious about prospects in certain markets like Nigeria and Bangladesh; other ASEAN and Latin American markets are recovering; BJAUT’s overall expectations include exports growing YoY in FY25, with revenue clocking much better growth. 3) In domestic 3Ws, recovery from a low base is now complete, with growth seen moderating to a single-digit on organic basis; E-autos are seen driving growth in permit-restricted markets (45% of industry); BJAUT has 30% mkt share in addressed markets (60% in markets where it has had presence for 6 months). 4) Commencement of Qute sales to Egypt, to help partially mitigate the lower 3W sales. 5) Triumph footprint to expand to 150 stores in H1; portfolio to expand thereafter; Company has 20% mkt share in some southern markets. 6) Growth in E-2Ws is seen continuing, perhaps at a slower rate now; footprint to expand to 600 stores by H1 vs. 200 now; Company has planned 2 new products under the Chetak brand in coming months. 7) BJAUT has received PLI certificate for E-3Ws and Chetak; expects similar profitability in E-3Ws as that in ICE, after the PLI benefit, though E-2W profitability is some time away as cost actions are being outpaced by decline in price points. 8) Price of some metals like aluminium and copper have moved up; Company has taken a marginal price increase in Q1. 9) Financing share in 2Ws/3Ws is 75%/90%; 10) Spares revenue in Q4 is Rs13bn.

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