Bajaj Auto stock falls 2% after price cuts on Freedom 125 bikes

Bajaj Auto shares saw a 2 per cent decline on December 4, following reports that the company had slashed prices for its Freedom 125 motorcycles.

This price reduction comes just five months after the bike’s launch. UBS Securities noted that the entry-level variant of the Freedom 125 saw a Rs 5,000 price cut, while the mid-level variant was reduced by Rs 10,000.

Additionally, Bajaj Auto had also cut prices for some Pulsar models after Diwali.

Investors reacted negatively to this price drop, possibly made to clear out inventory, which led to a dip in the stock.

As of 12:21 pm, Bajaj Auto’s shares were trading at Rs 8,995.85 on the NSE. This drop erased the stock's weekly gains, pushing it into the red for the day.

The company's domestic sales faced a setback, slipping 7 per cent year-on-year in November, despite the festive season. Bajaj Auto sold 2.40 lakh units in November, down from 2.57 lakh units in the same month last year. This decline in sales was anticipated due to a high base from the previous year and the earlier timing of the Diwali festivities.

While domestic sales lagged, Bajaj Auto's exports showed growth, recording a 24 per cent year-on-year increase at 1.80 lakh units. This boost helped the company achieve a 5 per cent rise in total sales, which reached 4.22 lakh units in November.

Despite these challenges, Rakesh Sharma, Executive Director at Bajaj Auto, remains optimistic about the company's future. He stated in a recent CNBC-TV18 interview that Bajaj Auto is aiming to outperform the industry’s projected 6-8 per cent growth by capitalizing on new launches. Key to this strategy are innovative products like the Freedom CNG motorcycle and new additions to the Pulsar lineup. Bajaj Auto is also focusing on strengthening its presence in the growing 125cc and above segment, where it holds a 24-25 per cent market share, just behind the market leader.