Bajaj Holdings and Investments Q3 Results Analysis

For Q3, FY 2011-12, BHIL reported a 78% YoY fall in income from operations while net profits have fell by 85% YoY during the quarter.

Results Summary

• Income from operations fall by 42% YoY in 9mFY12 on the back of an over 90% YoY fall in profit booked on the sale of investments.
• Net profit decreased by 46% YoY for 9mFY12. For 3QFY12, profits fall by 85% YoY on lower profits booked on sale of investments.

What to Expect?

The dismal performance of BHIL is mainly due to the  negative performance of the broader markets. As BHIL is an investment company it has not got many opportunities for profit booking on its investments. However, BHIL’s investment book has continued to appreciate nicely as per the latest available data, the portfolio of investments has appreciated 4.6 times over cost. Judging by the performance of the Benchmark index so far this year, as well as the encouraging economic data the company’s prospects going forward seems to be positive. The potential of valuations catching up with earnings growth and stability in economic growth helps present lucrative opportunities in the long term for companies like BHIL.

HOLD the stock with a 3 year target price of Rs 1050.