Religare Capital has maintained 'Buy' on Bajaj Auto (BJAUT) after the company declared its second quarter results. The stock broker fixed price target at Rs 2,800.
Commenting on the results, Religare said, ''BJAUT's Q2FY16 domestic realisations rose 4% year-on-year (YoY) and 10% quarter-on-quarter (Q-o-Q) due to a better product mix. Soft commodity prices pushed EBITDA margins up 120bps YoY to 21.6% (RCMLe 21.2%) and aided adjusted PAT growth of 4% to Rs 9.3 billion (RCMLe: Rs 8.8 billion). BJAUT has taken a price hike of Rs 500-2,000 across motorcycles and Rs 2,000 in 3Ws effective September 1. Export realisations too have been rationalised for currency fluctuations effective from October 1.''
Commenting on the investment rationale, the stock broker said, ''Three new variants of Avenger will be launched this quarter which should further boost realisations. Management expects current Avenger volumes of 4,000 to triple to 12,000 once the variants hit the market. We build in volume growth of 5%, 11% and 13% for FY16, FY17 and FY18. BJAUT has started to gain share in the domestic market (18% in H1FY16 vs. 16.5% in FY15), while it should also benefit from a healthy export outlook. Maintain Buy.''
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