Bajaj Auto hits new peak on strong March sales; stock nears buyback price

The shares jumped 3 per cent on Tuesday. With today's gain, the stock price of Bajaj Auto has zoomed 85 per cent in the past six months

Shares of Bajaj Auto hit a new high of Rs 9,356 as they gained 3 per cent on the BSE in Tuesday's intraday trade after the company reported strong sales in March aided by healthy growth in export sales. The stock surpassed its previous high of Rs 9,284.65, touched on March 27.

The company's total sales increased 25 per cent year-on-year (Y-o-Y) in March 2024 to 365,904 units compared to 291,567 units in the corresponding month of last year. Domestic sales grew 18 per cent Y-o-Y at 220,393 units, while exports sales jumped 39 per cent to 145,511 units over the same month previous year.

With today's gain, the stock price of Bajaj Auto has zoomed 85 per cent in the past six months. Further, in the past one year, it has skyrocketed 134 per cent as compared to a 25 per cent rally in the S&P BSE Sensex. The stock is also close to its share buyback price of Rs 10,000.

Menawhile, for the first nine months of FY24 (9MFY24), Bajaj Auto reported revenue growth of 21 per cent Y-o-Y to Rs 33,201 crore aided by increase in average realisation, owing to increase in sales of high-end motorcycles, coupled with 22 per cent growth in domestic two-wheeler sales volumes. The revenue growth was also supported by a surge in domestic three-wheeler volumes by 76 per cent, supported by rising passenger transportation.

Operating margin rose to 19.4 per cent from 17.4 per cent in 9MFY23 driven by softer input cost, favourable product mix, and operating leverage. According to analysts, revenue growth is likely to sustain at 20-22 per cent in fiscal 2024 driven by better volume and realisation.

Bajaj Auto's performance will remain stable over the medium term, driven by healthy market position, strong product development capabilities, established brand, and diversified product portfolio. The company is looking to gain a crucial edge in the electric two-wheeler market with Bajaj Chetak, CRISIL Ratings said in a rationale.

"Bajaj Auto has continued to deliver on its 5 focus areas which are: 1) growth in 125cc+ segment through Pulsar franchise, 2) 80.0 per cent market share in domestic 3W and ramp up E3W, 3) QoQ improvement in exports, 4) ramp up in Chetak network and sales, 5) scale up Triumph and leverage new portfolio in KTM," said those at KRChoksey Shares and Securities in their December quarter (Q3FY24) result update.

Excluding a slower recovery in exports due to continued macroeconomic and geopolitical concerns, Bajaj Auto is firing on all the other focus areas. Even in exports, recovery continues, albeit at a slower pace.

"The strong growth and market share gains in the 125cc+ segment in domestic 2W and domestic 3W are the major contributors to Bajaj Auto’s record revenue and profitability. The company's businesses which are in the ramp-up phase namely Chetak E-2W, E-3W and Triumph are progressing well on the stated goals of new launches, network expansion, and market share gains," the brokerage firm said.