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Bajaj Auto April 2018 sales volume up 26% yoy powered by strong CV sales

Bajaj Auto Limited (BJAUT) reported 26% yoy sales volume growth in April 2018, led by commercial vehicles (CV). Motorcycle volumes were up 19% yoy on a weak base of April 2017 (up less than 1% yoy). The company sold a total of 4,15,168 vehicles in April 2018 against 3,29,800 vehicles in April 2017. The volume number was significantly higher than ET Now volume estimate of 3,30,000 units.

CV sales fired up overall volume growth with 65,551 vehicles sold in April 2018 against 35,868 vehicles in April 2017, growth of 83% yoy. This was the highest ever monthly volume number for BJAUT in the CV segment.

Overall motorcycle volumes were up 19% yoy in April 2018. Domestic motorcycle volume growth was 24% yoy on a weak base of April 2017 (down 19% yoy), while motorcycle exports were 13% yoy higher despite a high base of April 2017 (up 44% yoy). BAJUT sold a total of 3,49,617 motorcycles in April 2018 vs. 2,93,932 motorcycles in April 2017.

Export volumes for April 2018 were up 22% yoy despite high base of April 2017 (up 46% yoy). Export revival for BJAUT seems to continue in the first month of the new fiscal year (FY19). Exports were up 18% yoy in FY18 against decline of 19% yoy in FY17. Revival in crude oil prices led to improved prospects for BJAUT’s oil-dependent export economies in Africa and Latin America.

Management is positive on domestic 3W market due to removal of permit cap in Maharashtra, new permits in Delhi and transition from 2-stroke to 4-stroke 3Ws in Bangalore. Domestic motorcycle growth has been negative or in lower single digits in 9 out of past 12 months due to low customer interest in its Discover and Dominar brands. However, exports (3W and motorcycles) have been powering ahead (average 20% yoy growth over 12 months) led by recovery in BJAUT’s crude oil-driven export economies in Latin America and Africa. Given surging crude prices, exports will stay robust. Customer response to upcoming launch of Pulsar and Avenger models will be key monitorables going ahead.

Bajaj Auto Ltd is currently trading at Rs3,018.05 up by Rs70.05 or 2.38% from its previous closing of Rs2,948 on the BSE. The scrip opened at Rs2,982 and has touched a high and low of Rs3,183.80 and Rs2,982 respectively. So far 1,61,940 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs85,305.40cr.