Bajaj Auto - Cost Control, Favorable Mix Drive Profitability: Prabhudas Lilladher 

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Prabhudas Lilladher

Bajaj Auto Ltd.’s Q3 FY21 revenues were in-line while there was ~6.6%/6% beat at Ebitda/adj. PAT. This was led by continued tight cost control. Ebitda margins expanded 150bp YoY at 19.4% (PLe 18%) helped by better gross margins at 29.2% (PLe 28.5%) due to favorable mix.

While near term outlook looks positive given

• healthy exports momentum both for 2W/3W and
• likely beneficiary of RoDTEP scheme, the same is reflected in valuations.

We raise FY22/23 EPS by 4%/8.6% to factor in for sharp increase in KTM profits and better export outlook.

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