Bajaj Auto hits all-time high of Rs 5,076.85 on BSE after BofA Securities upgrades stock to buy

Bajaj Auto share price: The brokerage, in its note, said that all the segments of the two-wheeler major are well positioned for positive growth in FY25.

File image. Source: Reuters

Bajaj Auto share price: Shares of Bajaj Auto rallied as much as 6.32 per cent to hit a record high of Rs 5,148.35 apiece on the BSE on Friday, September 15, after reports said that global brokerage BofA Securities has upgraded the stock to Buy from Neutral and revised the target price to Rs 5,550 from Rs 5,100 earlier. The scrip ended at Rs 5,145, up 6.25 per cent.

The brokerage, in its note, said that all the segments of the two-wheeler major are well positioned for positive growth in FY25. It expects a 14-15 per cent revenue compound annual growth rate (CAGR) over FY23–26. The brokerage, as per reports, added that the company's business model is quite well positioned, with both cyclical and structural drivers at play.

The company's exports, in our view, finally seem to be inflecting, it said.

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Bajaj Auto August 2023 sales

Bajaj Auto said its total vehicle sales, including the sale of commercial vehicles, declined 15 per cent to 3,41,648 units in August. The company had reported total sales of 4,01,595 vehicles in August last year. The total domestic sales dropped 20 per cent to 2,05,100 units in the previous month as compared to 2,56,755 units sold in August 2022, Bajaj Auto Ltd said in a statement. Total vehicle exports fell 6 per cent year-on-year to 1,36,548 units in August from 1,44,840 units shipped to the overseas markets in the year-ago period, it said. READ MORE

Bajaj Auto Q1 Results

Bajaj Auto on Tuesday reported a 41.8 per cent year-on-year (YoY) rise in its standalone net profit at Rs 1,664.77 crore for the quarter ended June 30, 2023 (Q1FY24). The company had posted a profit of Rs 1,173.30 crore in the year-ago period. Total revenue from operations came in at Rs 10,309.77 crore, up 28.79 per cent against Rs 8,004.97 crore logged in the corresponding quarter of the previous fiscal. The company said its revenue growth was on the back of double-digit volume growth, with sustained buoyancy on the domestic front cushioning the weak exports.

Further, the company said it reported its highest quarterly EBITDA of Rs 1,954 crore, a growth of 51 per cent YoY (14 per cent QoQ). Margin came in at 19 per cent, up +280 bps YoY, driven by dynamic price vs. cost management, better foreign exchange realisation, and operating leverage; the slight dip sequentially was from the planned typical seasonal skew for commuter motorcycles, the company said in its press release. READ MORE

Expert's view on auto sector

InCred Equities, in its report dated September 2, 2023, said the weakness in tractor dispatches due to weak rainfall in August 2023 is a cause of concern. The seasonal weakness in monsoon rains and a delayed inventory build-up for the festive period led to weaker-than-expected sales across segments for original equipment manufacturers or OEMs. 2W makers recorded a mom ramp-up in dispatches to build up inventory for the festive season that commenced in August 2023.

"With the Nifty Auto Index’s forward P/E valuation below its 10-year mean providing comfort, we retain an overweight rating on automobile OEMs and our neutral rating on automobile component makers. Interest rates easing from their current peak levels around the festive period, thereby driving volume recovery, is a crucial trigger to watch out for. The key risks are poor rainfall distribution, delaying the recovery in rural demand," it added.

"The pecking order of our ADD-rated stocks is Bajaj Auto, Ashok Leyland, Maruti Suzuki, and M&M. We retain our REDUCE rating on Tata Motors, Eicher Motors, Escorts Kubota, and TVS Motor," the brokerage said.

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