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ICICI Securities Report
Bajaj Auto Ltd. Q1 FY25 Ebitda margin came in at 20.2%, up 20 basis points QoQ, and largely in line with consensus at 20%. Bajaj Auto reported 20%+ margins for the third consecutive quarter with efficient cost management initiatives while benefitting from favourable mix, currency and falling battery cell prices.
Export recovery is sluggish amid currency availability issues persisting in key markets like Africa; with this, we lower our FY25E/FY26E volumes by 4%/8%.
We factor in 10%/11% growth in domestic volumes and 12%/15% growth in exports in FY25E/26E, resulting in a revenue compound annual growth rate of 23% over FY24–26E (10% ASP CAGR).
We downgrade Bajaj Auto to Reduce, from Hold, with a SoTP-based target price of Rs 8,606 (core business at Rs 7,641, implying ~22 times FY26E core earning per share and cash/other investments of Rs 964) versus Rs 8,660 earlier.
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