Bajaj Auto (BJAUT) revenue increased 17% YoY/25% QoQ to Rs 89.1 billion, on account of volume increase by 9% YoY/24% QoQ to 1.3 million units. Export revenue increased 34% YoY/+46% QoQ to Rs 40.8 billion whereas USD realization was Rs 73.4. Gross margins declined -10bps QoQ to 29.2% due to higher RM cost. EBITDA margin for the quarter stood at 19.4% (+170 bps QoQ) due to lower operating expenses. Other expenses declined 5% YoY/+9% QoQ to Rs 5.5 billion; on account of drop in marketing spends and other cost cutting initiatives. Other income increased 1% YoY/29% QoQ to Rs 3.7 billion due to higher interest rates/yields. Overall, adjusted PAT stood at Rs 15.6 billion (-23% YoY /37% QoQ).
Commenting on the result review, the broking firm IDBI Capital said, "Bajaj Auto Q3FY21 result was above our and consensus estimates at EBITDA and Adj. PAT level due to lower RM/ operating cost and higher other income. We believe as restoring life back to normalcy and business as usual; with gradual opening up of educational institutes/colleges, organic demand for 2-wheelers should progressively start coming back. We expect domestic 2W/3W industry to see a double growth for FY22 on a low base."
Brokerage firm anticipates stronger recovery in export market for 2W/3W segment would help BJAUT to partially mitigate any slowdown in domestic market in near term. "We build our volume growth estimates for FY21/FY22/FY23 by 8%/10%/10% factoring the strong recovery in 2W/3W domestic/export market. Due to recent increase in share price we change our rating to Reduce from Hold) and arrive at a TP of Rs 3,385 (earlier Rs 2,890) based on PER of 15x FY23E EPS."
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