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Buy Bajaj Auto, target Rs 2900: Motilal Oswal Securities

Overall two-wheeler volumes declined 10.4% YoY to 325.3k units. Domestic motorcycle dispatches declined 21% YoY to ~173k units. Motorcycle exports grew 5.4% YoY to 152.3k units.

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Last Updated: Sep 04, 2019, 12.44 PM IST
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Meanwhile three-wheeler volumes declined 12.7% YoY to 64.7k units (v/s est. 59k units).
Motilal Oswal has given a 'buy' rating on Bajaj Auto with a target price of Rs 2,900 after the two-wheeler maker reported wholesale numbers in line with estimates at 3,90,000 units for August, down 11 per cent YoY. Domestic volumes declined 19 per cent YoY, while exports grew 0.3% YoY.

Overall two-wheeler volumes declined 10.4% YoY to 325.3k units. Domestic motorcycle dispatches declined 21% YoY to ~173k units. Motorcycle exports grew 5.4% YoY to 152.3k units.

Commenting on the month’s performance, Rakesh Sharma, Executive Director of Bajaj Auto, said the decline in growth rate has been more severe in August because a large part of the country was under heavy rains, which must have dampened sales.

Meanwhile three-wheeler volumes declined 12.7% YoY to 64.7k units (v/s est. 59k units). Domestic volumes declined ~6% YoY to 35k units and exports volume declined ~20% YoY to 29.6k units due to weak sales in Egypt. The company has reported improved walk-ins, inquiries and retail sales since the last week of August 2019.

"The stock trades at 16.7 times/15.3 times FY20E/FY21E consolidated EPS. We maintain a buy rating on the stock," the brokerage said.

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