Sector Update| 3 December 2019
Automobiles
Bajaj Auto
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
BJAUT IN
289
914.5 / 12.8
3290 / 2400
-4/4/3
CMP: INR3,160
TP: INR3,169
Neutral
In-line at ~403k units (flat YoY)
Domestic volumes down ~12% YoY, exports up ~14% YoY
BJAUT’s sales were flat YoY at ~403k units (in-line) in Nov’19.
Domestic volumes declined ~12% YoY to 208k units (in-line), while exports
increased ~14% YoY to ~195k units (our estimate: 184k).
2W volumes were flat YoY at 343.4k units. Domestic motorcycle dispatches
declined ~14% to 176.3k units, while motorcycle increased ~18% YoY to 167.1k
units.
3W volumes were flat YoY at ~59.8k units, with domestic volumes up 6.4% at
31.4k units, but exports down 8.1% YoY at 28.3k units.
According to Rakesh Sharma, ED of Bajaj Auto,
“We do not expect to hit sales
of 4 lakh for the month of December because it is a seasonally weak month.
That is the case almost every December, every year because there is a lot of
pullback when the model year changes etc., both on the 3-wheeler side and
domestic motorcycle side but our exports should continue. However,
cumulatively we might be short of 4 lakh (units) in December. The international
performance has been steady and solid and the key driver for this has been
African continent where the economies are doing well, there is no major
dislocation in the currencies opposite USD and political side is steady. So we
have got a great competitive position with every third bike sold over there is of
Bajaj. So the moment economy stabilize, we get a good benefit from that”.
The stock trades at 17.6x/16.6x FY20/21E consol. EPS. Maintain
Neutral.
Financial & Valuation (INR b)
Y/E MARCH
2019 2020E 2021E
Sales
304
302
336
EBITDA
51.9 48.7 53.6
Consol. NP
47.9 51.9 55.0
ConsEPS(INR)
165
179
190
EPS Gr. (%)
9.3
8.5
5.8
BV/Sh. (INR)
753
843
937
RoE (%)
23.4 22.5 21.3
RoCE (%)
21.1 20.5 19.4
Valuation
P/E (x)
19.1 17.6 16.6
P/BV (x)
4.2
3.7
3.4
EV/EBITDA (x)
13.8 14.1 12.2
Snapshot of volumes for November-19
YoY
Company Sales
Bajaj Auto
Motorcycles
Total Two-Wheelers
Three-Wheelers
Domestic
Exports
Nov-19
4,03,223
3,43,446
3,43,446
59,777
2,07,775
1,95,448
MoM
Residual Residual FY20 YTD
Growth Monthly Monthly
YoY (%)
MoM
FY20
Nov-18
Oct-19
FY20 YTD FY19 YTD (%) chg
Gr. (%)
(%)
Run rate Run rate
chg
(%) chg
estimate
4,06,930
3,46,544
3,46,544
60,386
2,34,818
1,72,112
-0.9
-0.9
-0.9
-1.0
-11.5
13.6
4,63,208
3,98,913
3,98,913
64,295
2,78,776
1,84,432
-12.9
-13.9
-13.9
-7.0
-25.5
6.0
32,87,196
28,09,226
28,09,226
4,77,970
18,12,784
14,74,412
34,79,714
29,36,035
29,36,035
5,43,679
20,48,070
14,31,644
-5.5
-4.3
-4.3
-12.1
-11.5
3.0
47,39,420
40,16,753
40,16,753
7,22,668
25,45,594
21,93,826
-5.6
-5.2
-5.2
-7.7
-13.4
5.5
-5.7
-7.2
-7.2
2.4
-17.9
11.2
3,63,056
3,01,882
3,01,882
61,174
1,83,203
1,79,854
4,10,900
3,51,153
3,51,153
59,746
2,26,598
1,84,302
Jinesh Gandhi - Research analyst
(Jinesh@MotilalOswal.com); +91 22 6129 1524
Aanshul Agarawal - Research analyst
(Aanshul.Agarawal@MotilalOswal.com); +91 22 7193 4337
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.