Net sales grew 2% y-o-y (8.6% q-o-q) to Rs 6,100 crore (estimate of Rs 6,020 crore) on the back of improved mix (higher 3Ws and premium motorcycles) and higher dollar realisation at Rs 65.2 (v/s Rs 63.9 in 1QFY16). Also, company has took price increase in domestic market (ex-CT100) in range of Rs 500-2,000 for motorcycles and up to Rs 2,000 for domestic 3Ws effective September 1, 2015.
Gross margins improved 70bp q-o-q, driven by favorable Fx (70bp q-o-q benefit). EBITDA margin improved 270bp y-o-y (+130bp q-o-q) to 21.6% (v/s est. of 21.1%), driven by favorable forex and operating leverage benefit (50bp q-o-q). Higher other income of R1.5b (v/s estimate of R1.1 billion) drove PAT to R9.3 billion (v/s estimate of R8.7 billion).
We raise our EPS estimates for FY16/17/18 by 5%/3%/7%, respectively. The stock trades at 14.9x/13.3x FY17/FY18E EPS. We value Bajaj Auto at Rs 2,948.
Volumes declined 3.4% y-o-y (-10% q-o-q) to 951000 units, impacted by 15% y-o-y decline in exports (13% y-o-y decline in 2W export and 23% decline in 3W). Domestic motorcycle volumes grew 8% y-o-y, whereas domestic 3W volumes grew 3% y-o-y.