What Helped Bajaj Auto Stand Out Among Peers So Far This Year
Bajaj Auto Ltd. is the only stock on the Nifty Auto Index that has gained among peers so far this year on the back of higher share of exports to its overall sales and market share gains in the commuter segment, among others.
The stock of the maker of Pulsar motorcycles turned positive on Aug. 14 and has since then rallied nearly 15 percent, according to Bloomberg data. Its peers in the 15-member gauge, though pared some of the losses, remained in the negative during the period. The Nifty Auto Index has dropped 13 percent so far this year.
Bajaj Auto exports one in every two motorcycles (about 46 percent), which partly helped it to offset the worst auto slowdown in more than a decade, according to JPMorgan. The company’s earnings, too, have held relatively better than its peers, the research firm said in a report. Besides, the automaker has managed to gain market share in the entry-level commuter segment in India on lower prices than peers, it said.
Global research firm Maybank Kim Eng said the two-wheeler maker has progressively updated its portfolio to the BS-VI compliant models, and the new variants launched under the Pulsar brand have received good market response. Subdued crude oil prices due to concerns over slowing global growth is an additional tailwind.
Earlier this month, Bajaj Auto announced its re-entry into the scooter market after a decade with an electric version of its iconic Chetak. The new Chetak has a range of 100 kilometres on a single charge and will be priced at not more than Rs 1 lakh, it had said.
The company is debt free and had cash and cash equivalents of Rs 18,900 crore as of March 2019, according to its exchange filing.
The stock is at 16 times its FY20 estimated price-to-book ratio. Analysts, however, see a limited scope of upside as the stock trades at nearly 8 percent above the 12-month Bloomberg consensus target price of Rs 2,893 apiece.
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