Bajaj Auto extends loss for second day on poor November sales figures; brokerages divided

Bajaj Auto share price extended loss for the second straight session on Friday, falling nearly 3 per cent in two days. It has slipped nearly 2 per cent to touch a day’s low level of Rs 3643 per share on the BSE intraday during Friday’s trading session.

The weakness in the stock can mainly be attributed to the poor November numbers as the total sales figures dipped 19 per cent year-on-year to 3.06 lakh units, similarly, the exports of the two-wheeler company declined by 30 per cent YoY to 1.53 lakh units on Thursday, December 1, 2022.

Amid selling pressure in the two-wheeler company shares, the global brokerages are divided on the stock. Morgan Stanley maintained an Overweight stance on Bajaj Auto with a target price of Rs 4309 apiece (18% upside), while Nomura maintained a Neutral rating with a target of Rs 4021 per share (10% upside).

Bajaj Auto reported better-than-expected operational performance for the second quarter of the financial year 2022-23 (Q2FY23), led by higher average sales realisations, improved US Dollar realisation, and a better product mix.

The management remains positive on growth prospects in domestic markets, led by new launches, recovery in three-wheeler sales, and improving industry prospects, while remaining concerned about exports in the near term, though expect Q3 exports to be better than Q2FY23, according to Sharekhan's report.

Amar Kant Gaur, Research Analyst, Philip Capital said, “We believe export concerns are transitory, the company will benefit from improved segment and variant mix as domestic three-wheeler demand also picks up despite near-term headwinds, besides, growth in exports combined with favourable foreign exchange, similarly, continued strength in KTM performance is a positive as well.”

The share price of Bajaj Auto grew nearly 10 and 11 per cent in the last one year and year-to-date respectively. The stock has outperformed the Nifty index as it gained between 6-7 per cent in one year and year-to-date, while underperformed to Nifty Auto Index, which surged 20 & 17 per cent.