India’s leading two-wheeler manufacturer said that it had dispatched 157,796 units of two-wheelers in January in the domestic market, against 203,358 units in the same month a year ago.
Total two-wheeler sales, including exports, declined 5 per cent year on year (Y-o-Y) to 332,342 units. However, two-wheeler exports jumped 19 per cent at 174,546 units in the reporting month.
Meanwhile, the company’s total sales, comprising two-wheeler and commercial vehicles, dropped 3 per cent Y-o-Y to 394,473 units in January, 2020.
In the past month, Bajaj Auto
has outperformed the market by gaining 7 per cent, against 4 per cent decline in the S&P BSE Sensex and 2 per cent drop in the Auto sector index till Monday. Yesterday, the stock hit a 52-week high of Rs 3,315 in intra-day trade.
“Commentary on the analyst call pointed to steady / stable outlook for exports / 3Ws for FY21; while domestic 2Ws business does face headwinds from BS6 led price/ affordability hit. BS6 transition has been kick-started and Bajaj seems to be following differentiated technology vs. peers (EI) here along with product upgrades,” analysts at JP Morgan said in Q3FY20 results update.
Strategically, we believe Bajaj Auto is moving in the right direction in terms of addressing the portfolio gaps and taking the lead in electric forays. Further, the company’s exports/3Ws exposure (65 per cent plus of earnings) mitigates the risk from a potential BS6 disruption/ growth shock in the domestic market. The stock is trading at 18x F21 P/E which is near the 5-year mean. Given the potential to gain market share, strategic changes and expectations of volume bounce-back F22 onwards, there is a case for multiples to improve mid-term, the brokerage firm said with ‘overweight’ rating on the stock.