Bajaj Auto
The share price of Bajaj Auto declined nearly 3 percent on September 7 after brokerage firm CLSA downgraded the stock to “outperform” from “buy” and cut the target price to 4,343 from Rs 4,677.
According to CLSA, the company’s exports remain under pressure. “Lower export volume assumptions lead to 6-9 percent cuts in FY23-24 earnings. Post-festive season demand and rural recovery are key factors to look out for,” its analysts wrote in a note.
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For August 2022, Bajaj Auto’s total sales surged 8 percent year-on-year, while exports fell 28 percent to 1,44,840 from 2,00,675 in the year-ago period.
In the two-wheeler segment, the company recorded highest ever sales of Platina, while exports declined 32 percent year-on-year to 1,21,787.
Amsec, formerly Asian Markets Securities, is also concerned about the export business.
In its latest report, the firm said, “Exports from Bajaj Auto could come under significant pressure due to adverse macro factors at the importing countries (currency depreciation in LATAM, lower forex reserves may compel temporary import restrictions), Sri Lanka, Nigeria and Egypt crisis. August exports seem to reflect these concerns.”
On the back of export pain, The company’s Q1FY23 performance didn’t impress analysts. The auto major reported a good set of numbers with a 10.6 percent year-on-year rise in net profit to Rs 1,173 crore. Total income stood at Rs 8,005 cr, up 8.4 percent against Rs 7,386 crore in the corresponding period of the preceding fiscal.
While “hold” calls on the stock have risen to 15 in August from 10 three months ago, “sell” calls have gone up to seven from four over the same time period.
In 2022, so far, Bajaj Auto stock has given nearly 17 percent returns, while it has seen a sharp decline of 5 percent in the last month.
But it is not all gloom and doom.
According to Sharekhan, automobile original equipment makers (OEMs) are beginning to see improvement in dispatches, bookings, inquiries and customer footfalls, with the festive season kicking in.
“We expect two-wheeler volumes to recover, especially in the entry and executive motorcycle segment, which has been sluggish lately,” the brokerage firm said in its latest note. It recommended a “buy” rating on Bajaj Auto with a target price of Rs 4,800.
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