Arihant Capital

Bajaj Auto (Hold)

CMP: ₹2,411.30

Target: ₹2,570

Q3 net revenues stood at ₹5,520 cr, an increase of 9.9 per cent on y-o-y basis. Volume was down by 0.9 per cent y-o-y. However, realisations were up by 9.9 per cent y-o-y. Export continued to remain strong and stood at ₹2,680 crore, an increase of 26.2 per cent on y-o-y basis. Volumes in export market continued to remain strong, registering a growth of 16 per cent. However, volumes in domestic market remained subdued.

We remain “cautiously optimistic” on Bajaj’s business outlook over FY15 & FY16, due to recovery in the domestic two-wheeler segment and strong export growth. We expect its share in domestic two-wheeler segment to decline owing to the increased competition from Honda. However, we are quite confident of its export growth momentum to continue.

We forecast Bajaj’s domestic volumes to remain under pressure in FY15 and thus expect domestic volumes to decline by 3 per cent in FY15 and grow by 7 per cent in FY16. Exports on the other hand are expected to report 15 per cent+ volume growth in FY15 as well as FY16. We believe export exposure will help Bajaj Auto to tide over weak domestic market.

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