In the domestic pack, Kotak Institutional Equities recommended a Sell, while Nuvama and Motilal Oswal took a hold and neutral stance, respectively raising concerns on exports outlook.
Bajaj Auto reported a standalone net profit for the quarter ended September at Rs 1,836 crore, which was higher by 20% compared with Rs 1,530 crore reported in the same quarter last year.
Revenue from operations rose 6% year-on-year to Rs 10,777 crore in the reporting period as against Rs 10,203 crore in the corresponding period of previous year.
While the profit figure was higher than the ET Now Poll estimate of Rs 1,771 crore, revenue came in slightly below.
This is what they recommended:
BofA: Buy | Target: Rs 1,750
BofA maintains a buy Bajaj Auto shares and hiked the price target to Rs 5,950 from Rs 5,550. Calling the quarter gone by as a good one for the company, the US brokerage said that the 3W segment stands out with festive guidance remaining optimistic. The stock has scope for valuations to get re-rated, it said further.
Kotak Equities: Sell | Target: Rs 4,500
Kotak recommended a ‘Sell’ stance on the scrip, saying that most positives for the company are already priced-in in the stock price. Company’s 2QFY24 EBITDA was in line with Kotak’s estimates, as better-than-expected gross margins were offset by lower-than-expected
realisations.
It expects a recovery in domestic and gradual volume growth in export 2W industry, though the downside risk persists in exports given an uncertain macroeconomic environment and geopolitical tensions.
Current profitability trends are likely to reverse partly, as the mix normalises, this brokerage warned.
Nuvama: Buy | Hold: Rs 5,380Nuvama retained a hold rating on Bajaj Auto with a September 2024 target price of Rs 5,380 revised upwards from the March 2024 target price of Rs 5,100 based on an uptick in FY24E/25E EPS by 3% each, factoring in higher realisations/margins.
The brokerage said that Bajaj Auto posted healthy Q2FY24 EBITDA/PAT broadly in line with expectations.
The 2W volume prospects remain positive, and it expects 7% CAGR over FY23-26E, led by continuing domestic growth and recovery in exports. However, a recovery in
exports could be gradual, and will depend on economic conditions and USD availability in Africa/Asia markets, in Nuvama’s view which sees it underperforming TVS Motors.
Motilal Oswal: Neutral | Target: Rs 1,700
Motial took a neutral view on Bajaj Auto estimating the price target at Rs 5,225 and valuing the stock at 18.6x/16.6x FY24E/FY25E consolidated EPS. The stock’s valuation fairly reflects the expected recovery as well as the risk of EVs. Both domestic and export volumes are expected to recover in FY24 from the low base, driving a healthy earnings recovery.
The two-wheeler company is likely to benefit from premiumisation trends, the opportunity in exports and the potential sizeable position in the Scooter market via EVs, the brokerage said. The company is vulnerable to possible disruption from electrification, in Motilal’s view.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)