Bajaj Auto after a fair show in Q1: Should you buy, sell or hold the stock?

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Bajaj Auto

Bajaj Auto share price gained marginally in the early trade on July 28 after the company reported better numbers for the quarter ended June 2022.

Two and three-wheeler maker Bajaj Auto on July 26 clocked a 10.6 percent year-on-year growth in standalone profit at Rs 1,173.3 crore for the quarter ended June 2022, supported by strong operating profit and price hikes. Profit for the June 2021 quarter was at Rs 1,061.2 crore.

Standalone revenue for the quarter Rs 8,005 crore, up 8.4 percent from the year-ago quarter led by pricing and mix, the Pune-based auto company said in its BSE filing. However, the sales volume declined 7.2 percent.

EBITDA grew by 15.82 percent year-on-year to Rs 1,297 crore for the quarter ended June 2022 and margin for the quarter expanded by 104 bps YoY to 16.2 percent.

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Here is what brokerages have to say about stock and the company after its June quarter earnings

CLSA

Broking house maintained buy rating on the stock, while cut target price to Rs 4,677 from Rs 4,774 per share on the back of steady results with volume outlook improving.

The chip shortage easing and domestic volumes are going to pick up. CLSA cut two-wheeler export volume assumptions on concerns around Africa, reported CNBC-TV18.

Jefferies

Brokerage house Jefferies has kept buy rating on the stock with a target at Rs 4,500 per share.

The gross profit per vehicle rose 4 percent QoQ to a new high. Indian 2-wheelers are ripe for a big cyclical revival from an abnormal trough.

The export outlook, however, has worsened amid weaker currencies, reported CNBC-TV18.

Morgan Stanley

Brokerage firm has maintained equal-weight rating on the stock with a target at Rs 4,182 per share.

The exports have risen at 5 percent CAGR over FY12-22, but in FY22, it’s up 22 percent YoY.

Morgan Stanley expects exports to slow down, & this should cap margin expansion. The valuation is in-line with last five-year median. However, success in EVs is key upside risk, reported CNBC-TV18.

Motilal Oswal

While near-term export outlook is negative, improving supplies will boost BJAUT’s market share in the domestic market. The market share would further benefit over the long term from: a) the premiumization trend, b) the opportunity in exports, and c) the potential sizeable position in the Scooter market via EVs. While the domestic 3W market appears to be on the recovery path, it is still vulnerable to a possible disruption from electrification.

“We maintain our neutral rating, with Target Price of Rs 4,200/share,” it said.

At 9:18am, Bajaj Auto was quoting at Rs 3,889.00, up Rs 10.80, or 0.28 percent on the BSE.

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