Bajaj Auto (Q3 FY13)

• Revenues at Rs54.1bn higher by 8.6% yoy; exactly in line with our estimates

• Blended realizations improved sequentially by 8.9% qoq on back of higher sales of 3W in export market

• Total volumes were up by 4.9% yoy and 7.5% qoq. Sequential recovery in 3Ws continued and the festive sales boosted the domestic motorcycle volumes in the quarter

• OPM at 18.7% (20bps lower than estimates), was 105 bps down on yoy basis, but improved by 29 bps over Q2 FY13

• PAT at Rs8.2bn in line with our estimates

• Maintain our rating of Market Performer with a revised 9-month price target of Rs2,107 

The quarter saw sharp improvement in the blended realizations on back of a favorable product mix. While domestic realizations were almost flat, export realizations improved a healthy 9% qoq on back of strong 3W sales. In the export market, 3W volumes jumped 21.5% qoq whereas the motorcycles recorded decline of 8.5% qoq. Total volumes sold in the quarter improved by 7.5% qoq and 4.9% yoy benefiting from the strong festive sales in the domestic market. Better realizations and robust increase in volumes sold translated into a healthy topline of Rs54.1bn implying growth of 8.6% yoy and 8.9% qoq.

Slight improvement in market shares in bikes… 3W’s continuing the uptrend…

Post the seasonally weak first quarter for domestic 3W volumes, the sales have been picking up and the surge in bygone quarter volumes indicated fresh licenses being issued. In domestic two wheelers market, the quarter saw some market share loss for HMSI, which implied gains for other players. BAL in the process managed to marginally gain market share (30bps) in the bygone quarter. The mix of the 2W’s sold in domestic market was seen favourable with the >125cc category accounting for 52.1% vis-à-vis 49.9% in Q2 FY13. In two wheeler export market also the mix was favourable, wherein the >125cc category accounted for 43.5% of exported 2W’s vis-à-vis 36.8% in Q2 FY13.

In the year gone by, the export markets of Africa have performed well growing by 12% whereas the Latin American markets have remained flat. The Sri-lankan market has been weak owing to duty hikes on imports and management informed that a further 5% hike was implemented 3W imports in the quarter.