24 November 2017
Market snapshot
Equities - India
Close
Chg .%
Sensex
33,588
0.1
Nifty-50
10,349
0.1
Nifty-M 100
19,884
0.3
Equities-Global
Close
Chg .%
S&P 500
2,597
0.0
Nasdaq
6,867
0.0
FTSE 100
7,417
0.0
DAX
13,009
0.0
Hang Seng
11,737
-1.9
Nikkei 225
22,523
0.0
Commodities
Close
Chg .%
Brent (US$/Bbl)
63
0.2
Gold ($/OZ)
1,291
-0.1
Cu (US$/MT)
6,937
0.2
Almn (US$/MT)
2,097
0.4
Currency
Close
Chg .%
USD/INR
64.6
-0.5
USD/EUR
1.2
0.2
USD/JPY
111.2
0.0
YIELD (%)
Close
1MChg
10 Yrs G-Sec
7.0
0.0
10 Yrs AAA Corp
7.8
0.0
Flows (USD b)
23-Nov
MTD
FIIs
0.0
2.3
DIIs
0.0
1.1
Volumes (INRb)
23-Nov
MTD*
Cash
341
394
F&O
11,340
6,813
Note: YTD is calendar year, *Avg
YTD.%
26.1
26.4
38.6
YTD.%
16.0
27.6
3.8
13.3
24.9
17.8
YTD.%
14.2
12.1
25.6
23.1
YTD.%
-4.9
12.7
-4.9
YTDchg
0.5
0.2
YTD
7.8
12.5
YTD*
306
5,630
Today’s top research idea
Bajaj Auto: Back on recovery path
Volume growth coupled with improving mix to drive margin expansion
Domestic 3W:
Strong medium-term visibility as regulatory changes in key
states (where BJAUT enjoys over 90% share) are opening-up incremental
opportunity of ~142k passenger 3W (v/s 240k sales in FY17).
Exports:
Stability in key markets, ramp-up in new markets drive recovery,
exports grew by 9.4% YTDFY18, avg. volumes of 135.3k/month (v/s avg
117.6k/month in FY17).
Domestic motorcycle:
Recovery driven by plugging portfolio gaps, recent
launch of ES variants in Economy and Pulsar 160NS in Premium.
KTM/Husqvarna contract manufacturing volumes could multiply by 3x in a few
years, Triumph would enable entry in mid-capacity cruiser segment (250-
750cc).
Improvement in market/ product mix could lead to EBITDA margin expansion of
~340bp to 22% by FY19 (v/s est. of 20.6%).
Broad-based recovery to drive ~16% EPS CAGR over FY17-20.
Buy
with TP of
~INR4,197.
Research covered
Cos/Sector
Bajaj Auto
Bata India
Monsanto India
Key Highlights
Back on recovery path
Premiumization to support margin expansion
Results below estimates
Piping hot news
President clears stricter version of Insolvency and Bankruptcy Code
President Ram Nath Kovind gave his assent to an ordinance amending the
Insolvency and Bankruptcy Code (IBC) on Thursday, barring errant promoters
of defaulting companies from regaining control of their assets being sold
under the bankruptcy process…
Chart of the Day: Bajaj Auto – Back on recovery path
Africa’s contribution to motorcycle exports from India
reduces significantly over the years, as LATAM and
SA/ME share increases
Export mix shifts in favor of premium products
Research Team (Gautam.Duggad@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.