Buy Bajaj Auto; target of Rs 3176: Centrum
Centrum’s research report on Bajaj Auto
Bajaj Auto has introduced an exciting new opportunity in form of 5-5-5 offer to buy Bajaj motorcycles in India. This offer commences from October 5, 2018 where customers get the benefit of five years of free own damage insurance cover, five free services and five years of free warranty on select Bajaj motorcycles (Platina, Discover, Pulsar and the V range of motorcycles) across all dealerships in India at no additional cost. Bajaj Auto is the first in the industry to introduce such an offer through the 5-5-5 scheme. One of the key benefits of this offer is five years of free own damage insurance cover for customers buying these bikes. We believe that these new customer centric schemes will help boost company sales this festive season. However, this will also hit the overall margin profile of the company. However, higher top-line growth should offset this negative impact on margin to large extent and there should not be meaningful change in earlier projected absolute profit numbers.
We continue to maintain our Buy view on the stock of the company.
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