Accumulate Bajaj Auto; target of Rs 1705: Dolat Capital

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.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment