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MOSL: AUTOMOBILES | Feb-20 wholesales- 1. Bajaj Auto; 2. Eicher Motors; 3. Hero MotoCorp

AUTOMOBILES | Feb-20 wholesales: 1. Bajaj Auto; 2. Eicher Motors; 3. Hero MotoCorp; 4. TVS Motor; 5. Ashok Leyland; 6. Mahindra & Mahindra; 7. Escorts

 

1. Bajaj Auto: Wholesales in line at 465k units (-10% YoY); Domestic volumes down ~25% YoY, exports up 9% YoY

• BJAUT's sales declined ~10% YoY to 465k units (in-line) in Feb'20.
• Domestic volumes were down ~25% YoY at 165.7k units (our estimate: 176.5k), whereas exports increased 8.6% YoY to 186.2k units (our estimate: 189k).
• 2W volumes declined 5.4% YoY to 310.2k units. Domestic motorcycle dispatches fell 24% YoY to 168.7k units. Motorcycle exports grew 8.6% YoY to 186.2k units.
• 3W volumes declined by 31.4% YoY to ~45k units (our estimate: 58.5k units) as domestic volumes were down 38% at 21.9k units, whereas exports were up 24% YoY at 22.8k units.
• According to Mr. Rakesh Sharma, ED, Bajaj Auto Ltd, "The underlying economic situation remains as it was before, which is a high single digit decline in the retail industry and on top of it there are issues of transition from BS-IV to BS-VI, which will add costs April onwards. So, the combination of a weak economic backdrop combined with added costs makes the outlook for April-June quarter quite weak for domestic business. Exports have had an outstanding run. We had the highest ever quarter in Q3, we had the highest ever sales in January and we have had strong growth of 15 percent in February. However, we are watchful about the impact of coronavirus. As yet there is no impact in our markets because of that. Some disruption in Chinese supply chains of motorcycles will definitely be an area of opportunity for a company like us, who commands 35 percent market share in Africa. Therefore, I expect the export performance to continue January and February the way it has been doing in Q3".
• The stock trades at 14.6x/12.9x FY21E/22E consol. EPS. Maintain