Bajaj Auto (Q3 FY13)

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

Jan 17, 2013 03:01 IST India Infoline News Service

CMP Rs2,072, Target Rs2,107, Upside 1.7%

  • 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 

Result table
(Rs m) Q3 FY13 Q3 FY12 % yoy Q2 FY13 % qoq
Total volumes 1,127,741 1,075,441 4.9 1,049,208 7.5
Export volumes 376,222 380,912 (1.2) 390,285 (3.6)
Total realizations (Rs) 51,588 46,361 11.3 47,392 8.9
Net sales 54,127 49,859 8.6 49,724 8.9
Material costs (37,157) (33,576) 10.7 (33,560) 10.7
Purchases (2,053) (2,040) 0.7 (2,126) (3.4)
Personnel costs (1,592) (1,382) 15.2 (1,532) 3.9
Other overheads (3,207) (3,019) 6.2 (3,353) (4.4)
Operating profit 10,118 9,841 2.8 9,152 10.5
OPM (%) 18.7 19.7 (105) bps 18.4 29 bps
Depreciation (411) (321) 27.8 (410) 0.1
Interest (1) (0)   (2)  
Other income 2,032 1,681 20.9 1,667 21.9
Extra ordinary items - (589)   -  
PBT 11,738 10,612 10.6 10,407 12.8
Tax (3,550) (2,660) 33.5 (3,000) 18.3
Effective tax rate (%) 30.2 25.1 518 bps 28.8 142 bps
PAT 8,187 7,952 3.0 7,407 10.5
PAT margin (%) 15.1 15.9 (82) bps 14.9 23 bps
Ann. EPS (Rs) 113.2 109.9 3.0 102.4 10.5
Source: Company, India Infoline Research

Robust 3W’s exports prop up realizations

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.


Operational Performance
Particulars Q3 FY13 Q3 FY12 % yoy Q4 FY11 % qoq
Motorcycles          
Domestic 687,351 642,395 7.0 601,876 14.2
Export 298,912 304,354 (1.8) 326,648 (8.5)
Three-wheelers          
Domestic 64,168 52,134 23.1 57,047 12.5
Export 77,310 76,558 1.0 63,637 21.5
Source: Company, India Infoline Research

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. 


Cost analysis
As a % of net sales Q2 FY13 Q2 FY12 bps yoy Q1 FY13 bps qoq
Raw material 68.6 67.3 131 67.5

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