Homegrown automaker Bajaj Auto’s shares accelerated by as much as 7.47% to reach an intraday high of 3995.00 apiece, on the back of healthy quarterly results. Its shares were trading at ₹ 3,958.05 apiece at 12:26 PM on Friday.
Bajaj Auto was one of the top gainers in the Nifty 50 index, amid an otherwise weak market. The company reported a better-than-expected third-quarter profit, due to strong domestic demand. Moreover, an increase in the prices of its motorcycles and scooters offset its weak exports.
The company’s consolidated net profit increased by 3.01% to ₹ 1472.70 crores in the October to December quarter of 2022, against ₹ 1429.68 crores in the corresponding quarter last year. Its total revenue from operations increased to ₹ 9318.54 crores in the December quarter, against ₹ 9,021.65 crores reported in the same quarter in the previous year.
Bajaj Auto said that its domestic business saw a sustained double-digit growth across both two-wheelers (2W) and three-wheelers (3W), buoyed by festive season sales for 2W. The company recorded high volumes for three-wheelers, leading to a larger market share.
Many Brokerages have upped their target on the shares of Bajaj Auto:
CLSA
The global brokerage has raised the target price to ₹ 4,619.00 apiece. This translates to an upside of 16.70% as compared to the current share price.
CLSA believes that low raw material costs, better forex realisations and a richer product mix contributed to Bajaj Auto’s December quarter earnings beat. It has increased the auto major’s earning assumptions by 14-15% for the financial year 2024 and 2025 to factor in a higher revenue and profit margin.
Morgan Stanley
Morgan Stanley has a contrarian overweight rating on Bajaj Auto. It has raised its target price to ₹ 4,449.00 from ₹ 4,258.00 earlier. The given target indicates an upside of 12.40% as compared to the current share price.
It believes that the slowdown in exports and domestic two-wheelers is priced-in and valuations are attractive. In addition, it believes that launches of electric vehicles and a successful launch of the premium cruiser will drive a re-rating.
JP Morgan
JP Morgan has an overweight rating on the stock and it has raised its target price to ₹ 4,400. 00. This translates to an upside of 11.17% as compared to its current share price.
The brokerage believes that the company’s core business has mostly bottomed and that their rising focus on EVs is a positive. It cited strong earnings despite weak volumes, increasing aggression in three-wheelers and two-wheelers and a potential bottoming of exports as factors behind the upgrade.
Written by Simran Bafna
