Prabhudas Lilladher has given Hold recommendation for Bajaj Auto with a target price of Rs. 3919 in its research report issued on Jul 22, 2021

Prabhudas Lilladher’s research report on Bajaj Auto

BJAUT’s 1QFY22 results were impacted by lower scale of operations and RM cost inflation. Gross margins contracted 590bp YoY/ 110bp QoQ, yet better product mix led by higher share of exports and higher USD realizations partially offset the RM dent. Also launch of Pulsar helped BJAUT to gain market share in 125cc segment (+300bps in 1QFY22), thereby aiding domestic motorcycle segment. Market share stood at 19.7% in 1QFY22 v/s 18.1% in FY21. Management remained cautious on margin outlook amid RM inflation. However, factors such as 1) healthy exports momentum both for 2W/3W and 2) likely beneficiary of RoDTEP scheme, are favoring factors, in our view.

Outlook

We largely keep our estimates unchanged and retain ‘HOLD’ with revised TP of Rs3,919 (v/s Rs3,927, 18x Mar-23 EPS).

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