Bajaj Auto stock falls 3% after BofA Sec cuts target price

Shares of Bajaj Auto fell nearly 3 per cent today after Bank of America Securities (BofA Sec) downgraded the stock to 'underperform' from a 'buy' call. The international brokerage and financial services body cut its target price to Rs 3,450 from Rs 4,200.

Bajaj Auto shares plunged 2.81 per cent to Rs 3,601.65 against the previous close of Rs 3,705.65 on BSE. The large cap stock trades higher than 200-day moving averages but lower than 5-day, 20-day, 50-day and 100-day moving averages. A total of 0.12 lakh shares of the firm changed hands, amounting to a turnover of Rs 4.28 crore on the BSE. Market cap of Bajaj Auto slipped to Rs 1.04 lakh crore.

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The large cap stock hit a 52-week high of Rs 4,250 on July 1, 2021 and a 52-week low of Rs 3,028.35 on December 20, 2021. The stock has lost 13.88 per cent in a year and gained 11.42 per cent this year.

BofA Securities said the downgrade for Bajaj Auto comes on the deteriorating export outlook with macro turning challenging in its key export markets (especially Nigeria). The brokerage expects export volumes of Bajaj Auto Expect to decline in FY23 against street expectations of 8-10 per cent growth. It sees lower earnings per share (EPS) by 4-6 per cent for F23/24 estimated as lower volume assumptions by 7-8 per cent.  

Meanwhile, the company reported a flat set of sales at 3,47,004 units in June as compared to 3,46,136 units in the corresponding month last year.

Domestic sales (two-wheelers and commercial vehicles) fell 15 per cent to 1,38,351 units last month from 1,61,836 units in June 2021.

Exports, however, spiked 13 per cent to 2,08,653 units over 1,84,300 vehicles in June 2021.

Total two-wheeler volumes, including exports, in June 2022 stood at 3,15,948 vehicles, an increase of 2 per cent over 3,10,578 units in the same month a year ago.

But, domestic two-wheeler sales fell 20 per cent at 1,25,083 vehicles as against 1,55,640 units in June 2021.

On June 27, the firm announced a share buyback worth Rs 2,500 crore. The buyback represents 9.61 per cent of the total paid up share capital. The firm said its board cleared buy back of shares at a price not exceeding Rs 4,600.

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