Bajaj Corp Ltd's Q3FY19 numbers were broadly in-line with our estimates on all fronts. The company's revenue in the third quarter of FY19 grew 10.3% yoy to Rs229.6cr, in-line with the estimates. However, on account of higher raw material and employee cost, EBITDA grew only 4.7% yoy to Rs71cr (estimated Rs69.2cr). EBITDA margin, thus, contracted 167bps yoy to 30.9% (estimate 30.7%). Aided by higher other income, Bajaj Corp reported an 8.9% yoy growth in PAT to Rs60.1cr (estimate 57.9cr).
Raw material and employee costs were up 164bps and 122bps yoy (as percent of net sales).
The cost (adjusted landed cost, net of input credit) of key raw materials LLP (~31% of total cost) and Refined vegetable oil (~14% of total cost) were up by 20.5% and 12.3% yoy respectively.
Other income for the quarter stood at Rs7.4cr against Rs4.5cr in Q3FY18.
Company recommended an interim dividend of Rs14 per share.
Volume market share of Bajaj Almond Drops improved to 7.7% in MAT Nov 18 (up 50bps yoy). And, No Marks witnessed 2x offtake growth in Q3FY19.
Further, company launched Rs10 pack of ADHO for the rural market with an objective to upgrade the consumers.
Domestic business sales grew by 12.5% yoy (ex-CSD 11.7% yoy); modern and general trade grew by 27.9% and 10.3% respectively. Key positive surprise was rebound in CSD sales, up 35.3% yoy. International business was also up 11.8% yoy.
In volume terms, CSD, MT and GT grew by 34.2%, 21.8% and 5.1% yoy respectively. However, international business sales volume declined by 2.1% yoy.
Company indicated that rural markets are still leading the overall growth; witnessed buoyancy in the rural offtakes in Q3FY19 vs Q2FY19. Wholesale channel also witnessed better traction towards the end of Q3FY19.
Though CSD performed better during the quarter, company remains uncertain about growth outlook.
Towards the end of Q3FY19, input costs have started witnessing softening trend; we believe the benefit for the same will be reflected in Q4FY19E.
The company will be hosting Q3FY19 conference call on Thursday, January 10.
Stock closed 2.32% down on account of muted result. We await more clarity on demand outlook during the conference call. Stock is currently trading at PE of 22x FY20E EPS.
Bajaj Corp Ltd share price is currently trading at Rs381, down 3 points, or 0.78%, from its previous close of Rs384 on the BSE. The scrip opened at Rs388 and has touched a high and low of Rs389.75 and Rs376.05, respectively. So far, 4,63,349 (NSE+BSE) shares have been traded on the counter. The stock is currently trading below its 200-DMA.
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