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ICICI Securities Report
Bajaj Auto Ltd.'s Q4 FY24 Ebitda margin at 20.1% was flat QoQ (versus consensus estimate of 19.7%. Margin was flat QoQ mainly due to mix improvement (higher share of three-wheelers), offsetting the impact of lower volumes.
Bajaj Auto is confident of retaining ~20%+ Ebitdam amidst rising scale of e-two-wheelers in coming quarters, purely driven by rising scale of e3Ws and efficient cost management initiatives.
We are factoring in 10%/8% growth in domestic volumes and 20%/25% growth in exports in FY25/26E, respectively, resulting in a revenue compound annual growth rate of 27% over FY24-26E (10% average selling price CAGR).
We maintain Hold rating on Bajaj Auto with a revised DCF-based target price of Rs 8,660 (core business at Rs 7,692, implying ~20 times FY26E core EPS and cash/other investments of Rs 969) versus Rs 7,274 earlier.
Change in target price is driven by rollover in valuation, higher earnings in FY25/26E and building in re-rating driven by the possibility of Bajaj Auto delivering 20%+ Ebitdam despite rising e2W volumes.
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