Wednesday 25 May 2016

Bajaj Auto net profit likely to decline qoq

Bajaj Auto, one of the largest automobile players in the country, will announce its financial results for the fourth quarter ended March 31, 2016 on May 25.

Bajaj Auto, one of the largest automobile players in the country, will announce its financial results for the fourth quarter ended March 31, 2016 on May 25.

As per IIFL’s forecast, the company is expected to register a net revenue of Rs.5,189 crore, a rise of 9.5% yoy, but a drop 6.8% on qoq basis.

Operating profit margin of the company is likely to be at 20.7%, growing at 314 bps yoy while declining by 34 bps qoq.

IIFL estimates the company’s net profit to be at Rs.821 crore, which constitutes a growth of of 32% yoy while a drop of 8.9% qoq.

Although Bajaj Auto’s product mix has not changed materially, contribution of exports has dipped substantially.

According to IIFL estimates, autos are to register strong PAT growth (32.4% yoy) with most major players doing well. Auto volumes were robust across segments, except cars. OPM of most companies under coverage will rise on account of benign commodity prices and operating leverage.

Other key quarterly results on May 25 include Abbott India, AIA Engineering, Apar Industries, Apollo Hospitals, Ashok Leyland, Container Corporation Of India, Cummins, Escorts, GAIL, Glaxosmithkline Pharmaceuticals, Godrej Industries, Info Edge India, L&T, Lakshmi Machine Works, Prism Cement, Siti Cable, Thermax, TV Today, VIP Industries and Wheels India.

Our preview coverage universe of 374 companies, representing ~75% of India’s equity market cap is expected to report 4.2% yoy drop in net profit in Q4 FY16. On a qoq basis, profits will rise by 17% on account of low base of preceding two quarters, which had witnessed sequential PAT declines.

stock view:

Bajaj Auto Ltd is currently trading at Rs. 2401.45, up by Rs. 16.95 or 0.71% from its previous closing of Rs. 2384.5 on the BSE.

The scrip opened at Rs. 2395.35 and has touched a high and low of Rs. 2403.05 and Rs. 2381 respectively. So far 26820(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 69000.28 crore.

The BSE group 'A' stock of face value Rs. 10 has touched a 52 week high of Rs. 2655 on 23-Jul-2015 and a 52 week low of Rs. 2133.15 on 26-Aug-2015. Last one week high and low of the scrip stood at Rs. 2503.8 and Rs. 2366 respectively.

The promoters holding in the company stood at 49.29 % while Institutions and Non-Institutions held 25.97 % and 24.73 % respectively.

The stock is currently trading below its 50 DMA.

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