- 17 Oct 2024
- ICICI Securities
News: Bajaj Auto reported steady performance in Q2FY25. Total operating income for the quarter came in at ₹ 13,127, up ~22% YoY amidst 16% YoY growth in volumes at 12.21 lakh units. EBITDA for the quarter came in at ₹2,652 crore with EBITDA margins at 20.2% (flat QoQ). PAT in Q2FY25 stood at ₹2,005 crore (up 9.2% YoY) despite accounting for an exceptional one-time deferred tax provision. Excluding this provision, PAT grew 21% YoY to ₹2,216 crores. Company generated >₹ 2,000 crore as FCF during the quarter with surplus cash as of Q2FY25 end at ~₹ 16,400 crore.
Views: Bajaj auto has successfully augmented market share in premium motorcycle segment (>=125cc) and EV space, which now contributes significantly to the revenue. EV sales now contribute ~20% of its domestic revenues while EV+CNG contribution is pegged at ~44%. Steady recovery in export volumes and strong leadership in 3W domain enhanced its profitability for the quarter. Going forward management expects to carry forward this growth momentum and also hinted at new platform launch of Bajaj Chetak (E-2W) in near future. The festive demand is the current season is tad below expectations with industry poised to clock ~3-5% growth in sales volumes vs. earlier expectation of ~5-8% YoY growth. With calibrated capex spends and new product launches, alongside a growing financing arm (BACL), it is well positioned to drive sustainable double digit topline and earnings growth going forward. However, it now trades at >30x PE to its earnings as of FY26E which shall limit the stock price appreciation in our view.
Impact: Neutral