Target Rs 4,493
LTP Rs 3,476
Bajaj Auto is the flagship company of the Bajaj Group and is one of the leading manufacturers of two-wheelers and three-wheelers in India. It is the second largest player in the domestic motorcycle industry with a market share of 18%.
In the three-wheeler space, Bajaj Auto enjoys a leadership position commanding a market share of 61.5% in the domestic market.
Over the past few years, the company has witnessed strong growth in the export market. It has a presence in over 79 countries that contribute nearly 52.7% to its total revenues.
After three years of consecutive decline, two-wheeler manufacturers are likely to see a sales volume growth of 6% for domestic two-wheeler companies in FY23.
The increase in volumes will be driven by improved mobility, and pent-up demand, supported by a normal monsoon and the softening in input costs.
Going ahead, the company has sourced a new supplier to combat semiconductor shortages. Furthermore, the company would focus on restocking inventory at dealer levels.
In the electric vehicle (EV) segment, the company has commissioned a new state-of-the-art plant this June, which will help it to capitalize on the opportunities that EVs offer.
The domestic brokerage firm estimates Revenue/EBITDA/PAT to grow at a CAGR of 12.7%/17.7%/15.6% over FY22-24E.
Religare Broking recommends a Buy rating on the stock with a target price of Rs 4,493, valuing the standalone business at 18x FY24E EPS.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)