Bajaj Auto (Q1 FY13)

India Infoline News Service | Mumbai |

The blended realizations declined by 1.4% on a sequential basis on back of an adverse product mix both in domestic and export markets.

CMP Rs1,549, Target Rs1,747, Upside 13.0% 
  • Total volumes were up by 6.1% qoq and 1.3% down on yoy basis. The sequential volume growth was led by motorcycle exports, which zoomed up by 30% qoq.

  • Domestic volumes were flattish both on yoy and qoq basis.

  • Blended realizations were down by 1.4% qoq on account of an adverse product mix with the high margin three wheelers sales taking sharp hits. The net sales for the quarter were Rs48.6bn, marginally up by 3.4% on yoy basis.

  • The OPM at 17.9%, was almost flat on a yoy basis, while it declined by 188 bps qoq.

  • Recently, price cuts (5-15%) have been taken in Sri-Lanka while price hikes (Rs 500-1500 on 2W/3W) have been taken in domestic markets.

  • We maintain our BUY with a revised 9-month price target of Rs1,747

Result table

(Rs m) Q1 FY13 Q1 FY12 % yoy Q4 FY12 % qoq
Total volumes 10,78,971 10,92,815 (1.3) 10,17,167 6.1
Export volumes 4,15,645 4,27,364 (2.7) 3,47,414 19.6
Total realizations 45,095 43,066 4.7 45,729 (1.4)
Net sales 48,657 47,063 3.4 46,514 4.6
Material costs (33,163) (32,896) 0.8 (31,412) 5.6
Purchases (1,917) (1,763) 8.8 (1,714) 11.8
Personnel costs (1,604) (1,431) 12.1 (1,196) 34.2
Other overheads (3,255) (2,575) 26.4 (2,987) 9.0
Operating profit 8,717 8,398 3.8 9,206 (5.3)
OPM (%) 17.9 17.8 7 bps 19.8 (188) bps
Depreciation (352) (306) 15.0 (434) (18.8)
Interest (0) (2)   (18)  
Other income 1,820 1,441 26.3 1,395 30.5
Extra ordinary items - - - 203 (100.0)
PBT 10,184 9,531 6.9 10,351 (1.6)
Tax (3,000) (2,420) 24.0 (2,631) 14.0
Effective tax rate (%) 29.5 25.4 407 bps 25.4 404 bps
Reported PAT 7,184 7,111 1.0 7,720 (6.9)
PAT margin (%) 14.8 15.1 (34) bps 16.6 (183) bps
Ann. EPS (Rs) 99.3 98.3 1.0 106.7 (6.9)

Source: Company, India Infoline Research

Motorcycles lead growth in exports, domestic volumes flat
Despite the recent disruptions in exports owing to adverse situations in markets of Egypt and Sri Lanka, BAL managed to grow its exports by 19.6% sequentially over Q4FY12 on back of a robust growth in two wheeler volumes. The two wheeler exports grew by 29.7% on qoq basis and 7.1% on yoy basis. While motorcycles exports surged, three wheeler exports declined by 41% yoy and 22.8% qoq. On the domestic front, the volumes were observed to be flat on a yoy basis, and a marginal decline of 1% was seen on qoq basis. 

Operational performance

Particulars Q1 FY13 Q1 FY12 yoy (%) Q4 FY11 qoq (%)
Motorcycles          
Domestic 618,489 623,175 (0.8) 616,516 0.3
Export 364,134 339,876 7.1 280,732 29.7
Three-wheelers          
Domestic 44,837 42,276 6.1 53,237 (15.8)
Export 51,511 87,488 (41.1) 66,682 (22.8)

Source: Company, India Infoline Research

Realizations decline sequentially.. Adverse product mix
The blended realizations declined by 1.4% on a sequential basis on back of an adverse product mix both in domestic and export markets. In the domestic markets, mix changed in favour of the 75-125cc category as the 75-125cc category registered 19% qoq growth as against a fall of 13.4% qoq for 125-250cc. Resultantly, the mix (75-125cc:125-250cc) unfavourably changed to 50:50 in the quarter from 42:58 in Q4FY12. Going forward, we expect improvement in the mix on back of the recent refreshed launches of Pulsar and Discover. Moreover, a price hike taken on July 14 (Rs 500 in 2W; Rs 500-1500 in 3W) is expected to help BAL on realizations front. On the exports side, after the price cuts the volumes of the high margin 3W exports are expected to pick up and support realizations from here.

Cost analysis

As a % of net sales Q1 FY13 Q1 FY12 bps yoy Q4 FY12 bps qoq
Raw material 68.2 69.9
BSE 3,172.00 [39.90] ([1.24]%)
NSE 3,165.75 [45.10] ([1.40]%)

***Note: This is a NSE Chart

 

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