- 22 Oct 2024
- ICICI Securities
BAJAJ AUTO ALLEVIATES INDUSTRY SLOWDOWN FEAR
News: In an interview with CNBC, Rajiv Bajaj, MD of Bajaj Auto clarified on festive guidance which were given by the management in Q2FY25 earnings call. He said Retail sales numbers for motorcycles during the festive season have lagged behind Vahan data, indicating that real growth may differ from initial guidance based on earlier figures. He believes real growth may be closer to double digit rather than low single digit. Along with that production will ramp up significantly in October and November, with expectations of over 50,000 sales per month for three-wheelers during this period. Exports are also showing strong traction, with sales projected to reach near pre-COVID levels of ~1.8-2 lakh monthly by next month. The company aims to sell 30,000 units each of the Freedom 125 and Chetak this month, with plans to refresh the Chetak portfolio by January. Additionally, there are ambitions to enter the e-rickshaw market in the next financial year.
Views: The volume guidance of 4.7 million units for FY25E is marginally short of our assumption wherein we had built in sales volume of 4.9 million units for FY25E. The company comments on not so bad festive season comes as a respite and shall channel lower double digit sales volume growth for the industry as a whole for FY25E. We still expect domestic 2-W space to outperform other vehicle categories for FY25E. However, with valuation expansion already in place, we maintain a hold rating for the stock as it is well positioned to drive sustainable double digit topline and earnings growth going forward.
Impact: Neutral