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Weak export mix, volume may hit Bajaj Auto Q4 revenue QoQ: Analysts

Bajaj Auto Q4 preview: Analysts estimate flat input cost assumption, and lower operating leverage will weigh on EBITDA and EBITDA margins in Q4FY23

Bajaj Auto
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Lovisha Darad New Delhi

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Bajaj Auto Q4 preview: The two-wheeler auto major Bajaj Auto is expected to register up to 11 per cent quarter-on-quarter (QoQ) decline in revenues to Rs 8,312 crore in the January-March quarter (Q4FY23), due to decline in volumes, and weak export mix, note analysts.

However, higher share of three-wheelers in the product mix, and average selling price (ASP) will drive revenue growth by 6 per cent on a year-on-year (YoY) basis. The auto-maker will declare results on Tuesday, April 25.

On the EBITDA (earnings before interest, tax, depreciation, and amortisation), and margins front, meanwhile, analysts expect a sequential impact due to flat input cost assumption, and lower operating leverage.

While EBITDA is expected to decline 12.3 per cent QoQ to Rs 1,558 crore in Q4FY23, EBITDA margins are expected to contract up to 72 basis points (bps) to 18.3 per cent. Profit-after-tax (PAT), on the other hand, is largely to follow EBITDA growth.

That apart, in the prior month, Bajaj Auto saw 14.3 per cent month-on-month (MoM) decline in domestic motorcycles, with exports down 14.2 per cent MoM. 

At the bourses, shares of Bajaj Auto surged 7.41 per cent in the January-March period of calendar year 2023, as against a 3 per cent decline in the S&P BSE Sensex, during the same period.

Here's what top brokerages estimate for Bajaj Auto's Q4FY23 numbers:

Prabhudas Lilladher
The brokerage firm estimates the auto-maker to report an 11 per cent QoQ decline in revenues to Rs 8,319 crore in Q4FY23, led by export market decline from currency devaluation, lower affordability, and other macroeconomic issues in export markets. Adjusted PAT, too, is likely to drop 9 per cent QoQ to Rs 1,356 crore. Overall, analysts said that the company's volumes de-grew by ~13 per cent on a sequential basis. 

Motilal Oswal
Though analysts forecast 2-wheeler domestic volumes to grow 15 per cent YoY, 2-wheeler export volumes are expected to decline 38 per cent YoY. Despite price hikes, operating leverage is likely to dent margins on a sequential basis to 18.8 per cent in Q4FY23, as against 19.1 per cent in Q3FY23. The brokerage firm foresees FY24/25 earnings-per-share (EPS) downgrade due to slower-than-expected recovery both in domestic, and exports demand. 

Axis Securities
Lower exports are likely to contract sales volumes for Bajaj Auto, down 12 per cent YoY, and 13 per cent QoQ, said analysts. While they expect to revenue to rise 6 per cent YoY led by higher ASP (up 21 per cent YoY/3.6 per cent QoQ) on the back of higher share in 3-wheeler in the product mix, lower volumes are likely to drive revenues 10 per cent on a QoQ basis. EBITDA, and EBITDA margins, too, are expected to fall sequentially on lower operating leverage, and nearly flat input cost assumption.

With a 13 per cent QoQ decline in volumes, and weak export mix, the topline is expected to decline 10.8 per cent QoQ to Rs 8,312 crore. Moreover, bottom-line is expected to decline 12.5 per cent QoQ, on the back of margin contraction on a sequential basis. However, the brokerage firm expects the auto-maker's volumes to recover in the coming quarters, given recovery in rural markets. That said, they shared a 'buy' rating on the counter, with Rs 4,151 per share target price.

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First Published: Apr 24 2023 | 12:30 PM IST

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