Bajaj Auto skids 3% in strong market as January sales decline

Shares of Bajaj Auto slipped 3 per cent to Rs 3,176, on the BSE on Tuesday as traders booked earnings after the enterprise reported 22 per cent drop in domestic two-wheelers revenue for January.

The stock has fallen 4 per cent from intra-working day higher degree of Rs 3,313. At 01:45 pm, Bajaj Auto was the top loser amid the S&P BSE Sensex shares. In comparison, the benchmark index was up 2.1 per cent at forty,709 factors.

India’s leading two-wheeler producer explained that it had dispatched 157,796 units of two-wheelers in January in the domestic market, versus 203,358 units in the exact same thirty day period a calendar year back.

Complete two-wheeler revenue, including exports, declined five per cent calendar year on calendar year (Y-o-Y) to 332,342 units. Nevertheless, two-wheeler exports jumped 19 per cent at 174,546 units in the reporting thirty day period.

In the meantime, the company’s full revenue, comprising two-wheeler and business cars, dropped 3 per cent Y-o-Y to 394,473 units in January, 2020.

In the previous thirty day period, Bajaj Auto has outperformed the market by getting seven per cent, versus 4 per cent drop in the S&P BSE Sensex and 2 per cent fall in the Auto sector index till Monday. Yesterday, the stock strike a fifty two-7 days higher of Rs 3,315 in intra-working day trade.

“Commentary on the analyst simply call pointed to steady / steady outlook for exports / 3Ws for FY21 when domestic 2Ws business does experience headwinds from BS6 led price tag/ affordability strike. BS6 transition has been kick-begun and Bajaj seems to be next differentiated technological know-how vs. peers (EI) below alongside with product or service updates,” analysts at JP Morgan explained in Q3FY20 effects update.

Strategically, we believe that Bajaj Auto is relocating in the ideal path in phrases of addressing the portfolio gaps and getting the guide in electrical forays. More, the company’s exports/3Ws publicity (sixty five per cent furthermore of earnings) mitigates the threat from a prospective BS6 disruption/ growth shock in the domestic market. The stock is buying and selling at 18x F21 P/E which is in the vicinity of the five-calendar year mean. Presented the prospective to attain market share, strategic modifications and anticipations of quantity bounce-back F22 onwards, there is a situation for multiples to enhance mid-term, the brokerage company explained with ‘overweight’ rating on the stock.

Initially Published: Tue, February 04 2020. 14:01 IST