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ICICI Securities Report
Bajaj Auto Ltd.'s Q2 FY22 Ebitda margin was above consensus expectations at 16% (up 83 basis points QoQ).
The margin recovery was led by operating leverage (volumes up 16% QoQ) even as gross margins declined ~65 bps QoQ.
Remissions of Duties and Taxes on Exported Products (export incentive scheme) benefits amounted for ~150 bps improvement.
Bajaj Auto remains a play on robust export demand with unique tailwinds in H2 FY22 (e.g. forex depreciation, RoDTEP incentives) which could aid margins amid the inflationary input cost environment.
New model launches (H2 FY22 onwards) are likely to aid domestic growth while most export markets (led by Latin America and Africa) are likely to remain healthy as many of these economies benefit from commodity inflation.
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