Bajaj Auto (BJAUT IN) 4QFY23 – Result First Cut – Strong Performance all around

Bajaj Auto (BJAUT IN) delivered a strong performance in 4QFY23 beating our estimates across all the parameters. Its EBITDA margin stood at 19.3%, 101bps above our estimate of 18.3%. Its revenue and PAT exceeded our estimates by 7.4% and 8% respectively.

• Revenue increased by 12% YoY (down 4% QoQ) to Rs89bn, above our estimate of Rs82.9bn on the back of a price hike, better product mix (higher 3W contribution of 15.5%) and favourable exchange rate.
• Revenue growth was led by ASP growth of 27% YoY (up 10% QoQ) to Rs103,810 despite volume de-growth of 12% YoY (down 13% QoQ) to 8,57,788 units.
• Its EBITDA increased by 26% YoY (down 3% QoQ) to Rs17.2bn, 13.4% above our estimate of Rs15.1bn due to higher realisation and tight cost control on expenses. Its EBITDA margin expanded by 215bps YoY (up 20bps QoQ) to 19.3%, vs our estimate of 18.3%, due to lower RM cost and higher realization. RM/Sales declined 215bps YoY and 83bps QoQ to 69.8%, aiding margin expansion.
• It recorded a Adj PAT of Rs14.3bn (up 17% YoY and down 4% QoQ), vs. our estimate of Rs13.3bn, due to strong operating performance despite lower non operating income and higher tax rate.

Our View: BJAUT reported strong performance in 4QFY23 beating our estimates across all the parameters. Considering the better domestic volumes traction with likely market share gain, higher realization, better mix, likely improvement in exports from current level, strong margin performance and healthy cash flows, at present we have BUY rating on BJAUT.