While Kotak Institutional Equities recommended a ‘Sell’ rating and slashed the target price, Nuvama stuck to its ‘Hold’ stance. JM Financial retained its buy view on favourable product mix and healthy domestic demand.
Two-wheeler major Bajaj Auto on Wednesday reported a 37% year-on-year (YoY) growth in its standalone net profit at Rs 2,042 crore for the third quarter ended December 2023, beating ET Now poll estimate of Rs 1,961 crore. The company’s profit was Rs 1,491 crore a year ago.
Read More: Bajaj Auto Q3 Results: Net profit jumps 37% YoY to Rs 2,042 crore, beats estimates
Here’s what brokerages recommended:
Kotak Equities: Sell | Target: Rs 5,000
Bajaj Auto reported a decent quarter and its earnings were in line with Kotak’s estimates. However, it has maintained a ‘Sell’ rating on the counter holding it expensive at current valuations. The target price suggested by Kotak is Rs 5,000. It said that most positives are already priced-in, in the current market price.
Bajaj Auto’s 3QFY24 EBITDA was 2% above estimates, driven by the richer product mix in the export market and commodity tailwinds, Kotak note said.”We expect domestic 2W segment recovery to continue, but downside risks persist (exports), given the higher inflation environment and geopolitical tensions. In our view, current profitability trends are likely to partly reverse, as the mix normalizes,” the brokerage note said.
Nuvama: Hold | Target: Rs 6,850
Nuvama has reiterated a ‘Hold’ view on the stock for a target of Rs 6,850 revised from an earlier target of Rs 6,700. Bajaj Auto’s Q3FY24 EBITDA was above Nuvama’s estimate on better realisations/spare part sales and lower operating expenses. “We slightly increased FY24–26E EPS estimates by 2–4%. The 2W volume prospects remain positive, and we expect 9% CAGR over FY23–26E, led by continuing domestic growth,” it said in a brokerage note.
However, a recovery in exports could be gradual, and depends on USD availability and economic conditions in Africa/Asia markets, the note said further.
JM Financial: Buy | Target Price: Rs 7700
While domestic demand remains healthy, exports sales are expected to witness gradual recovery owing to macro headwinds. Margins in the medium-term are likely to draw support from a) favorable mix and b) higher operating leverage.
Given the successful track record of product intervention by BJAUT in the last few years, we remain positive on the stock. We estimate revenue / EPS CAGR of c.16%/c.21% over FY23-26E. Maintain BUY with Mar’25 TP of INR 7,700 (22x PE vs. 18x earlier). Delayed recovery in exports remains key risk to our estimates.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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