For June ’09, Bajaj Auto reported volume decline of just 1.8% y-o-y. This is the smallest rate of decline since October ’08.
Exports recovered – after y-o-y declines of the past four months. The most encouraging sign was the recovery in three-wheeler volumes, which surged 26% y-o-y.
The company’s motorcycle volumes declined 4.5% y-o-y. Month-on-month, however, this is the company’s fifth consecutive growth.
A new motorcycle is to be launched is July ’09, likely at the entry level. With the launch of the new Pulsar 220, the company expects Pulsar sales to rise beyond the 48,062 units for June.
After a dip in 4QFY09, exports are now normalising (4.4% y-o-y and 15.4% m-o-m growth), consequent on the clearing of export-related channel inventory. The company expects to register gradual m-o-m growth in exports from now on.
The segment registered its highest volume growth since January ’07 – of 26% y-o-y and 25.9% mom. Bajaj Auto attributes this growth to marketing measures focused on the in-city segment.
We expect volume growth of 5.7% in FY10; at our present estimates, our residual growth expectation is 12.6%. Retain HOLD rating on the stock.