Bajaj Auto - 4QFY22 - Result First Cut - Reliance Securities

Bajaj Auto (BJAUT IN) delivered a strong operational performance in 4QFY22 with EBITDA margin coming in at 17.1%, 225bps above our estimate of 14.9%. Its revenue and PAT are our estimates by 4.5% and 17.5% respectively.

# Revenue decreased by 7% YoY (down 12% QoQ) to Rs. 79.7 bn, above our estimate of Rs. 76.3 bn.

# Revenue growth was led by ASP growth of 11% YoY (up 7% QoQ) to Rs81,650 though volume declined by 17% YoY (down 17% QoQ) to 9,76,651 units.

# Its EBITDA decreased by 10% YoY and 1% QoQ to Rs13.7bn, 20.3% above our estimate of Rs11.4bn due to higher realization and tight cost control on other expenses. Its EBITDA margin contracted by 61bps YoY (up 191bps QoQ) to 17.1%, vs our estimate of 14.9% due to better operating leverage, higher realization, and better product mix.

# It recorded a PAT of Rs14.7bn (up 10% YoY and up 21% QoQ) and adj PAT of Rs12.2bn (down 8% YoY and up 1% QoQ) (Rs3.2bn towards incentive receivable from State Government of Maharashtra under Package Scheme of Incentive 2007 (PSI), for the period April 2015 to March 2021), vs. our estimate of Rs10.4bn.

Our View: BJAUT reported healthy operational performance despite subdued volumes in 4QFY22. We expect its export business to witness a healthy growth in FY23E on the back of positive traction in the African market. We also expect the domestic 2W industry to recover gradually going forward in FY23, while its domestic 3W business would bounce back strongly in FY23E respectively. In view of healthy exports, recovery in high margin 3W business, margin expansion, improving return ratio and strong balance sheet, we have a BUY rating on BJAUT with a 1-Yr Target Price of Rs4,250, while post-management call, we may revisit our estimates and TP.

Shares of Bajaj Auto Limited was last trading in BSE at Rs. 3833.50 as compared to the previous close of Rs. 3905.95. The total number of shares traded during the day was 45542 in over 6394 trades.

The stock hit an intraday high of Rs. 3992.05 and intraday low of 3804.80. The net turnover during the day was Rs. 175516137.00.