Worst day for Bajaj Auto shares in eight months - whats worrying investors

Bajaj Auto shares faced heavy selling on Monday after reports suggested the Pune-based auto maker may trim production by 25 per cent from the next month. Bajaj Auto shares fell by as much as Rs 209.9 or 5.5 per cent to end at Rs 3640.8 apiece on BSE — their worst intraday fall in percentage terms since October 26, 2020. 

According to reports, the production cut is likely in the motorcycle as well as three-wheeler segments. Uncertainty in the company's biggest market, Nigeria, owing to demonetisation and elections have reportedly led to the decision. 

Bajaj Auto has seen a gradual fall in its exports, which account for 41 per cent of its sales in the two-wheeler segment. Nigeria contributes 65 per cent to Bajaj Auto's two-wheeler expoerts. 

Analaysts see demand remaining soft in Bajaj Auto's main international markets over the next 3-4 months. 

Year-on-year change in Bajaj Auto exports in the past few months

The production cut will bring take the company's capacity utilisation below 50 per cent. 

Bajaj Auto is scheduled to report its sales in February 2023 this week.  

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