homevideos Newsmarket Newsstocks NewsBajaj Auto falls over 2% after BofA Sec downgrades stock on declining export outlook
Bajaj Auto falls over 2% after BofA Sec downgrades stock on declining export outlook
Bank of America Securities has downgraded Bajaj Auto to ‘underperform’ from ‘buy’, cutting its target price to Rs 3,450 from Rs 4,200.
Shares of Bajaj Auto fell as much as 2.8 percent on Friday after Bank of America Securities downgraded the company’s shares to ‘underperform’ from ‘buy’. BofA Securities also cut its target price to Rs 3,450 from Rs 4,200.
This downgrade came largely on the back of a deteriorating export outlook because of the challenging macros in key markets. The brokerage house expects the export volume to decline in the financial year 2023 for Bajaj Auto versus the street expectation of 8-10 percent growth.
BofA Securities has also cut the EPS (earnings per share) estimate by 4-6 percent for financial year 2023 and has lowered the volume guidance assumption by 7-8 percent.
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However, the brokerage house believes that the absolute downside is limited because of valuations, cash on the books and a small buyback. It finds better plays in the auto space compared to Bajaj Auto and hence the downgrade.
Weak sales performance
On Friday, Bajaj Auto reported total domestic sales of 1.38 lakh vehicles — a decline of 15 percent on a year-on-year basis. Its exports, however, increased 13 percent on year to 2.08 lakh vehicles, according to a regulatory filing.
The two-wheeler major's total sales — those in the domestic as well as foreign markets — came in at 3.47 lakh vehicles, exceeding Nomura's estimate of 3.21 lakh.
However, the commercial vehicles business reported firm growth as domestic CV sales rose 114 percent year-on-year to 13,268 units.
Watch the accompanying video of CNBC-TV18’s Nimesh Shah for more details.
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First Published: Jul 1, 2022 3:40 PM IST
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