High & buy, it’s Bajaj Auto on dips: Analysts

Mumbai: Shares of Bajaj Auto jumped to a lifetime high on Thursday following better-than-expected earnings in the September quarter. The company is clocking in strong volume growth in two-wheelers while continuing its recovery in the three-wheeler segment. The shares saw their sharpest intraday jump in nearly three years to close almost 7% higher at ₹5,482.60. The stock ended as the best performer on the Nifty 50 as analysts raised the target price by 1-11%, while largely maintaining their positive view.

“We forecast 14.6% YoY growth for the domestic motorcycle segment for Bajaj in FY24,” CLSA Asia Pacific Markets said. The domestic two-wheeler market is estimated to grow by 5-8% in FY24, experts said. Strong demand from both rural and urban markets, along with better availability of finance and a favourable base effect will drive improvement in volumes for Bajaj Auto, Nuvama Institutional Equities said.

Both the brokerages have raised the target price for the shares by 3-5%. The average target price for the shares is ₹5,490, estimates from Bloomberg showed. While this implies that the stock is unlikely to gain much from the current levels, the shares are showing strength on technical charts.

“The trend for the shares is looking bullish, and it can extend momentum towards ₹5,570-5,650 in the short term,” said Rajesh Palviya, head of technical and derivatives research at Axis Securities. He suggests buying the shares only on dips, expecting the ₹5,200 mark to be a major support level for the shares.

Sahaj Agarwal of Kotak Securities, meanwhile, expects the stock to see some consolidation before it gains momentum. He too advises buying the shares only on dips.

Bajaj Auto is up nearly 52% so far in 2023, outpaced only by Tata Motors within the Nifty 50. The index has gained 8.4% so far this year.

“Competitive position in 125cc+ segment, expanding premium motorcycles, electric two-wheelers portfolio and focus on electric three-wheelers provides operational levers to maintain margins,” said Axis Securities, maintaining a ‘buy’.

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