Bajaj Auto Ltd Stock Fundamental Analysis.
Bajaj Auto Ltd is one of the leading automobile manufacturers in the premium motorcycle segment. The company also makes three-wheelers (3W) and is a leader in the 3W segment. Motorcycles constitute around 85% of overall volumes, while 3W contributes around 15% share.
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Bajaj Auto Limited continues to improve on overall sales, driven by robust export growth momentum, domestic market share gains and operational improvement.
The management continues to remain positive on the growth prospects, especially exports, where Bajaj Auto Limited expects to gain market share in key markets, driven by the brand recall, product launches, enhanced distribution network and value for money proposition.
The company expects to maintain an average monthly export run-rate of more than 2,00,000 units going forward.
Bajaj Auto Limited is the second-largest motorcycle manufacturer in India with a market share of about 20%.
Over the years, Bajaj Auto Limited has created a strong brand not only domestically but also in export markets. BAL is the leader in the premium motorcycle segment having a market share of 41%. Apart from premium motorcycles,
Bajaj Auto Limited is also the leader in the 3W segment, commanding a market share of about 57%. Motorcycles constitute about 85% of overall volumes, while 3W contribute 15% share.
Bajaj Auto Limited is well-positioned in the domestic as well as in global markets to deliver sustained growth in the long term. The company is a leader in the premium segment bikes such as Pulsar, Avenger, KTM, Dominar, and Husqvarna.
Exports currently constitute about 45% of overall volumes, with Africa, Southeast Asia, and Latin America among the key markets.
The company generates more than 85% of its export revenue from geographies where Bajaj Auto Limited is either a No. 1 or No. 2 player.
Export growth is organic and will continue to be a long-term driver for Bajaj Auto Limited. We remain positive about the company’s growth prospects going forward.
Demand likely to pick up in domestic and export markets
Two-wheeler demand improved m-o-m and continued through the festive season in October-November last year.
We expect growth momentum to continue in FY2022E, driven by strong rural sentiments in the domestic market.
The government’s reform measures coupled with increased preference for personal transport are expected to improve volumes.
We expect a recovery from FY2022E, driven by the normalisation of economic activity and pent-up.
Export markets have witnessed a notable recovery in volume sales offtake across regional markets - ASEAN, South Asia, Middle East, and Africa. OEMs are positive on recovery and expect these markets to improve further. Most of the market has reached pre-COVID.
Baja Auto Ltd stocks Strong earnings growth.
Bajaj Auto Ltd is India’s second-largest motorcycle player with a market share of about 20%. The company is the market leader in the premium motorcycle segment (125-200 cc) with a market share of 41%.
With new launches, Bajaj Auto Ltd aims to increase its market share further and is targeting a market share of ~25% over the next few years.
With network expansion, Bajaj Auto Ltd aims to retain its leadership position in motorcycle exports. BAL’s earnings to report a 23.2% CAGR during FY2021-FY2023E, driven by a 19.8% revenue CAGR and a 50-bps improvement in EBITDA margin from 17.8% in FY2021 to 18.3% in FY2023E.
Bajaj Auto Ltd has a strong, debt-free balance sheet. It has cash & cash equivalents of Rs. 16,240 crore with strong return ratios.
Bajaj Auto Ltd has a healthy dividend payout ratio of 90%. BAL is uniquely positioned to benefit from domestic two-wheeler demand and the export market, driven by its brand equity and value proposition.
Bajaj Auto Ltd Stock Recommendation.
Bajaj Auto Ltd’s business outlook remains positive with a recovery expected in FY2022, as economic activities normalise in the domestic market.
The management expects exports to remain a key growth driver in FY2022. We expect Bajaj Auto Ltd to continue to increase its market share in the domestic and export markets, given its strong portfolio of premium brands and cost-effective, entry-level electronic injection systems.
OPM would expand because of a richer product mix, operating leverage and cost-control measures. The company has strong long-term revenue visibility, given its leadership position in the premium bikes segment and key export destinations.
Lacklustre domestic sales performance in the last 3-4 months has led to a 24% stock price correction in the last six months. The stock trades below its historical average P/E multiple of 13.9x and EV/EBITDA multiple of 8.8x its FY2023E estimates.
Bajaj Auto is our most preferred pick in the two-wheeler space, led by strong exports, expected recovery in premium bikes and preparedness to scale EV business.
Bajaj Auto Ltd Stocks Target Price.
We have a Buy Recommendation on Bajaj Auto ltd Stock with a Target Price of Rs 4800. The Current Market Price of the Bajaj Auto Ltd Stock is Rs 3150.
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