Indiabulls Ventures

Bajaj Auto (Buy)

CMP: ₹2,847

Target: ₹3,133

Bajaj Auto, the flagship of the Bajaj group, is a leading manufacturer of two-wheelers (about 88 per cent of volumes) and three-wheelers. It is the market leader in three-wheelers, and is the second largest player in motorcycles and enjoys leadership in the premium segment. It is also the largest exporter of two-wheelers and three wheelers.

Investments rationale: a) 1. Bajaj Auto reported strong set of volume growth in the industry over the past couple of months and managed to clocked in volume growth in double digits as against the de-growth reported by its peers.

b) The management expects company’s ongoing strong momentum in domestic motorcycle segment to continue in FY20 as well due to new product launches coupled with its own thrust on market share. Bajaj Auto looks forward to increase its market share to 24 per cent over the next two years from about 20 per cent currently.

c) Bajaj Auto exports both in two-wheeler and three-wheeler has been increasing consistently over a period of 1 year and management is very confident of strong export growth in the future. The management also expects 3W exports to recover as distributors in Egypt are likely to do well.

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