CLSA retained an outperform rating on the shares of Bajaj Auto, after the two-wheeler manufacturer posted a 1% rise in turnover to Rs 6,774, even as the net profit fell by 1% to Rs 1,112 on a standalone basis, beating analyst estimates. CLSA says that the margins have surprised positively, even though the earnings have been modest. According to a company statement, Bajaj Auto recorded its highest monthly sale of 4,28,752 units in September. Sale volume for each month has progressively improved and the company has achieved a 14 per cent growth in September, the company said.
CLSA has a target price of Rs 3,550 on the shares on Bajaj Auto. The shares were trading at Rs 3,179.15 on NSE this morning, shedding more than 1.2% since the previous close. The shares have returned more than 22% in the year so far. CLASs target price implies an upside of more than 11% from the current market prices. “We like the company’s improving volume growth and earnings outlook,” CLSA said in its report. The research firm has also upgraded its FY 18-20 EPS estimate by 2-4%.
The company’s motorcycle volumes during the quarter (including exports) increased by a mere 2% to 918,721 units over the same period a year ago while total three-wheeler sales grew 14% to 152,789 units. The company had been expected to post a profit of Rs1,090 crore on net sales of Rs 6,289 crore, according to a Bloomberg survey of 19 analysts.
For international market, the company reported 6 per cent YoY growth in volumes at 4,02,575 units. The relative slowdown in Sri Lanka has been compensated by a substantial growth in volume in Bangladesh and Philippines, the company said in a BSE filing. “Order book for October is healthy and outlook for November and December is encouraging,” the company said on its international business.