Bajaj Auto: Margins disappoint; Rating 'Buy'

Bajaj Auto: Margins disappoint; Rating 'Buy'

n Net sales grew 6.9% year-on-year on 6% realisation growth. Net sales grew to R52.5 bn, while volumes grew marginally by 0.9% y-o-y (5.6% q-o-q) to 9.88 million units.

n Adjusted margin declined 70 basis points q-o-q to 18.9% on higher RM (raw material) cost pressures: RM cost rose 70 bp y-o-y to 70.1% on higher material cost pressures. Employee cost increased by 40 bp y-o-y on negative operating leverage.

n Profit after tax was below estimate at R7.4 bn (flat y-o-y) vs our estimate of R8.1 bn, driven by lower-than-expected Ebitda and increase in depreciation charges.