Bajaj Auto hits six-month low

Shares of Bajaj Auto have dipped 2.4% at Rs 2,128, its lowest level since August 2014 on the National Stock Exchange (NSE).

The stock of the country’s third largest two-wheeler maker has underperformed the market by falling 13% in past one month after reporting lower-than-expected vehicle sales for the month of January 2015. The CNX Nifty has declined about 1% during the period.

Bajaj Auto had reported a 12% decline in total motorcycle sales in January at 246,955 units as against 281,390 units posted in the same month last year. Total sales during the month declined 9% year-on-year to 288,746 units.

“Domestic motorcycle demand impacted due to excise duty hike and the management expects recovery only from Mar-15 onwards. Expects to reach around 200k/months, driven by launch of self-start Platina (launched in Jan-15) and several new Pulsar launches over next 2 quarters,” said analyst at Motilal Oswal Securities in report dated February 2, 2015.

Export volumes are expected to remain under pressure in short term due to issues in all of its key markets viz Sri Lanka (New government temporarily frozen orders given by the old government), Nigeria (election in Feb-15, historically retail volumes has disrupted during election) and Egypt (availability of USD key constraint to demand), adds analyst.

However, analyst maintains ‘buy’ rating on the stock with a target price of Rs 2,832.

Bajaj Auto Limited