Bajaj Auto: Exports Cushion Domestic Weakness, Says Motilal Oswal

Bajaj Auto's focus on exports and premium motorcycles helped it outperform the 2W industry in a tough year, Motilal Oswal Institutional Equities has said in a report.

"Contribution of exports to net sales grew 480 basis points to 46.8% in FY21. While its share in the domestic Motorcycle market declined marginally (50bp to 18%), led by market share loss of 770 basis points in the sports segment due to cannibalization by Pulsar 125cc," the broking firm has said.

"In the domestic 3W segment, it lost 670 basis points market share to 50.6%, due to sharp impact of COVID-19 in its area of strength: urban 3Ws. It improved its market share in both Goods Carriers (+670bp to 33.7%) and the Diesel Passenger segment (+12.7pp to 41.7%), in turn gaining leadership in all segments of 3Ws.

It has approved a new dividend policy that links payout to the level of cash/cash equivalents on its books, in turn increasing the payout up to 90% of PAT (v/s 50% as per its old policy),"Bajaj Auto has said.

The broking firm has maintained a neutral rating on the stock. "In the domestic 3W segment, it lost ~670bp market share to 50.6%, due to sharp impact of COVID-19 in its area of strength: urban 3Ws. It improved its market share in both Goods Carriers (+670bp to 33.7%) and the Diesel Passenger segment (+12.7pp to 41.7%), in turn gaining leadership in all segments of 3Ws. It has approved a new dividend policy that links payout to the level of cash/cash equivalents on its books, in turn increasing the payout up to 90% of PAT (v/s 50% as per its old policy)," the broking firm has said.