Bajaj Auto hits 52-week high on signing pact to set up factory in Chakan

Analysts at Emkay Global have a positive stance on Bajaj Auto on account of volume recovery expected in domestic two-wheelers (2Ws) segment
Shares of Bajaj Auto rose 3 per cent to hit a 52-week high of Rs 3,422 on the BSE on Thursday, up 6 per cent in three days, after the company announced an investment of Rs 650 crore to set up a new plant in Maharashtra. 

 
The stock of the two-three wheeler company was trading higher for the third straight day. It surpassed its previous high of Rs 3,384, touched on December 8, 2020. The stock had hit a record high of Rs 3,473, on February 2018.

Bajaj Auto, on Tuesday, signed a Memorandum of Understanding (MoU) with the Government of Maharashtra to set up a manufacturing facility on a proposed investment of Rs 650 crore in Chakan, Maharashtra.

The facility is expected to commence production in 2023. This facility will be utilised for manufacturing high-end KTM, Husqvarna and Triumph motorcycles as well as for electric vehicles starting with Chetak, Bajaj Auto said in a statement.

Under the arrangement, the Government of Maharashtra will facilitate Bajaj Auto in obtaining necessary permissions, registrations, approvals, clearances, fiscal incentives etc. from the concerned departments of the State, as per the existing policies, rules and regulations of the Government of Maharashtra, it said.

Analysts at Emkay Global Financial Services have a positive stance on Bajaj Auto on account of volume recovery expected in domestic two-wheelers (2Ws) segment with 18 per cent/7 per cent growth in FY22/23E, and improving growth prospects in exports (over 50 per cent of EBITDA) with expected growth of 23 per cent/10 per cent in FY22/23E.

The company witnessed flat growth in the initial days of the festive season and expects double-digit growth in exports for October-November 2020. However, domestic three-wheeler (3W) demand remains subdued at around 25 per cent of normal levels, and the recovery is expected only by the end of FY21E. Margin is also expected to slightly taper ahead, owing to an increase in commodity prices, which would be partially offset by price increases and better scale, the brokerage firm said in its September quarter result update.


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