Accumulate Bajaj Auto; target of Rs 1705: Dolat CapitalPosted on Saturday, May 19, 2012 - 15:27 pm
Dolat Capital is bullish on Bajaj Auto and has recommended accumulate rating on the stock with a target of Rs 1705 in its May 17, 2012 research report.
“Bajaj Auto, revenue up 11% YoY, led by 7% YoY volume growth Bajaj Auto reported top-line revenue at ` 46.5bn, up 11% YoY led by 7% YoY volume growth. The company sold ~900,000 motorcycles and ~120,000 three wheelers in 4QFY12. The company reported a 3% QoQ decline in its blended realisation per vehicle as a result of a lower 3W sales. Operating margins decline 120bps QoQ to 19.8% The company’s operating margins declined 120bps QoQ to 19.8%. This is 20bps lower than the guidance given by the company. This decline was purely led by lower realizations due to lower 3W sales. EBIDTA for the quarter was ` 9.2bn, up 7% YoY. Market share at 25.4% in motorcycle segment, down 140bps YoY Bajaj Auto lost market share to Hero Motocorp. Its share declined from 26.8% in FY11 to 25.4% in FY12. Its market share in the three wheeler segment improved marginally from 39.1% to 39.5%. PAT reported at ` 7.7bn in 4QFY12 The company reported its PAT at ‘7.7bn converting into an EPS of ` 26.7 for the quarter.”
“3W sales continue to be under pressure. The company maintained its guidance for doing a combined volume of 5mn for FY13. We have estimated a 10% volume growth for two wheelers and 6% volume growth for three wheeler segment. This gives us a volume of 4.75mn in FY13. With the recent softening in commodity prices, we continue to expect margins at 20% for FY13. The stock has underperformed over the last three months on fears of a slowdown in the 3W segment. It currently trades at 12.0xFY14E. We maintain Accumulate,” says Dolat Capital research report.
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