Bajaj Auto’s 4QFY20 earnings of Rs13.1bn is well ahead of our estimate of Rs9.1bn, driven by better than expected operating performance. Total income is down 8.6% YoY at Rs68.56bn and above our estimate of Rs66bn, driven by a higher than expected ASP growth of 10% YoY. EBITDA margin has been reported at 18.9%, up 200bps YoY and 60bps QoQ. The beat on our expectation was mainly due to better mix towards 3Ws, exports and sports segment motorcycles. This was aided by better forex realizations, whereas there was no commodity benefit. On the current situation, the management commented that, 50-60% of the domestic dealers have started operations and are running at 50% retails, i.e. sales are at 25% of normal levels. In the export markets, this number is about 30-35%. Its key market – Nigeria is at 40% level but it is facing issues on two fronts – COVID-19 and crude price fall. Management believes that if crude remains between US$30-40 per barrel then demand in markets like Nigeria will not be impacted but concerns about its currency devaluation will still prevail. To ensure export sales, the company will pass on some currency benefits in the existing geographies and will expand in new geographies like ASEAN, Brazil etc. In the domestic market, management expects demand to come back in 2HFY21 due to pent-up demand, driven by easing in lockdown, better rural prospects and its strong presence in 100-150cc segments. Management believes that COVID-19 will encourage some trends like personal mobility and downtrading. This can increase first time buyers and would largely benefit 110-125cc segments. Entry level segment (100cc) could be impacted as its buyers are more vulnerable now. Bajaj Auto doesn’t see any financing issues in 2W segment, although it does raise its concerns on 3W financing as lockdown has affected cash flows in this segment. We are positive on the company for a) its diverse product offering – Motorcycles, Three Wheelers, electric scooter and Quadricycle, b) it is the biggest exporter of 2Ws and 3Ws from India and export volume is ~45% of its total sales, and c) its strategy to sustain in a slowing demand environment by introducing stripped-down and lower priced variants of it key models like CT100b and Pulsar 125, which has helped it to gain market share in FY20. In our estimates, we have considered FY21 as a one off year and our FY22 estimates are on the base of FY20. We expect Volume/Revenue/PAT in FY22E to grow by 4/18/15% over FY20. We expect margin to remain stable between FY20 and FY22E. We continue to value it on SoTP basis with core valued at Rs2,058 (15x FY22E core EPS), cash of Rs723 per share and investment in KTM at Rs197. We reiterate our Buy rating with a revised target price of Rs2,982.