Bajaj Auto, India’s second largest motorcycle manufacturer posted a 19 per cent rise in its third quarter net profit. The company has reported a net profit of INR 795 crores for the third quarter which ended in the month of December 2011, compared with INR 667 crores which was the net profit attained by Bajaj Auto a year ago.
The Net sales of the company rose to INR 4840 cr from INR 3980 cr year ago.
“We are quite optimistic on the stock. The company has done very well even in tough market conditions during 2011,” said Mr. G Chokkalingam, Executive Director & Chief Investment Officer, Centrum Wealth Management.
“Going forward, we firmly believe that the stock will do well and the sector as a whole would benefit from expected interest rate reversal,” added Mr. Chokkalingam.
Economic Times has compiled analyst views on Bajaj Auto and two-wheeler sector as a whole:
Spark Capital Advisors
Average realization growth of 3.9% QoQ has been largely driven by higher export realizations. Export realizations increased by 9.9% QoQ due to favorable currency movement.
However, domestic average realization growth was flat at 0.65% with no product mix benefit on a sequential basis. In the ensuing quarters, we believe exports will continue to outgrow domestic business.
At CMP of Rs.1,462 the stock trades at 12.2x FY13E EPS. We currently have an Add-Outperform rating on the stock
Microsec Capital Ltd
Bajaj Auto’s net sales increased by 20% to Rs 4840 crore YoY and decreased by 4% QoQ while its adjusted PAT increased by 28% YoY and 4% QoQ to Rs854 crore.
At the CMP of Rs1460, the stock discounts its FY12E EPS of INR110.5 by 13.2x.
Technical View: Ranajit Kumar Saha, Sr. Manager- Technical Research, Microsec Capital Ltd
Bajaj Auto has been consolidating in the range of 1400 and 1500 since last fifteen days. The short term crucial resistance of the stock is at 1503 (near 200 DMA). If it breaks 1400, it may further go down to 1350. For the stock to turn positive, it first needs to consolidate above 1503.
Marwadi Shares & Finance
Marwadi Shares & Finance is of the view that Bajaj Auto’s earnings are above expectations and the company has benefited from rupee depreciation.
The company has clearly benefited from rupee depreciation on exports revenue, which has offset the slowdown in the domestic side and that in our view increases EBITDA margins by 100-125bps.
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