KR Choksey has given Buy recommendation for Bajaj Auto with a target price of Rs. 4483 in its research report issued on Oct 18, 2022
KR Choksey’s research report on Bajaj Auto
For Q2FY23, BJAUT reported net operating income of INR 1,02,027 mn, growth of 16.4% YoY and 27.5% QoQ. The total volumes for Q2FY23 increased by 0.6% YoY and 23.3% QoQ. Volumes improved due to improvement in semiconductor supplies. EBITDA for Q2FY23 was at INR 17,496 mn, grew by 25.0% YoY/ 36.0% QoQ. EBITDA margin improved by 117 bps YoY and 108 bps QoQ to 17.1% for the quarter. Margin expansion was aided by judicious price increases, cost management and better FX realization. Net Profit for the quarter was at INR 17,194 mn, down 15.7% YoY/ up by 47.8% QoQ. Net Profit is not comparable on a YoY and QoQ basis due to exceptional items in Q2FY22 and half-yearly accounting of share of profit of associates. Excluding exceptional items, the Adj. Net Profit grew by 11.8% YoY/ 47.8% QoQ.
Outlook
We assign a P/E multiple of 17.6x (18.0x earlier) on FY24E EPS of INR 254.3 (INR 249.1 earlier) to arrive at a target price of INR 4,483/share (unchanged); implying an upside potential of 23.5% from the CMP. Accordingly, we upgrade our rating to “BUY” from “ACCUMULATE” earlier, on the shares of Bajaj Auto.