Buy Bajaj Auto; target of Rs 4500: ICICI Direct

ICICI Direct is bullish on Bajaj Auto has recommended buy rating on the stock with a target price of Rs 4500 in its research report dated April 30, 2021.

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ICICI Direct’s research report on Bajaj Auto

Bajaj Auto reported a healthy operational performance in Q4FY21. Net revenues came in at Rs 8,596 crore (up 26.1% YoY) amid 17.9% YoY volume increase at 11. 7 lakh units (2-W up 23%, 3-W down 12%) and 7.8% QoQ ASP rise to Rs 73,492/unit. EBITDA margins for Q4FY21 came in at 17.7% (down 168 bps QoQ) with lower than anticipated decline in gross margins amid improved product mix in the 2-W segment. Consequent reported PAT was up 1.7% YoY to Rs 1,332 crore, with BAL declaring Rs 140/share as dividend for FY21, in line with its new dividend distribution policy.

Outlook

We build 22.2%, 15.5% sales, PAT CAGR in FY21P-23E. We value BAL at unchanged target price of Rs 4,500 using SOTP method (core business at 21x FY23E EPS and 2x P/B on KTM investment),

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