Neutral Bajaj Auto, target Rs 2,994: Phillip Capital
Bajaj Auto is a largecap company, operating in auto sector.
Shares of Bajaj Auto traded at Rs 3,011.8 around 2:20 pm on 20 May, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
March quarter highlights:
- Revenue at Rs 7,200 crore, led by improved realization, beat the brokerage's estimates by 4.6 per cent.
- Ebidta at Rs 1,160 crore was 4 per cent above our estimate.
- Ebitda margins flattish QoQ at 15.7 per cent and in line with estimate of 15.8 per cent.
- Adjusted PAT at Rs 1,070 crore, 5.7 per cent above our estimates due to higher other income.
View of the brokerage:
Bajaj Auto's strategy to gain market share in the domestic motorcycle segment might have provided the company and its dealers much needed volumes but at the cost of profitability and margins, the brokerage said.
The brokerage added that with consumers not easily absorbing insurance-led price pressure, an upcoming big price hike of nearly 8-10 per cent led by BS-6 could further cause volume and margin disruption.
"We tweak are numbers and value the stock at 15 times FY21 earnings and maintain ‘neutral’ with a target price of Rs 2,994," said the brokerage.