2-Wheeler Scrips Rise Despite Petro Price Hike Overhang

Scrips of two-wheeler companies have been on the ascend in the past four weeks even as the shadow of an oil price hike looms large over the capital markets. Activity has been mainly centred around the Bajaj Auto and Hero Honda stocks, with the latter registering a spurt in a short period.

Market expectations of poor results from Bajaj Auto saw the scrip being hammered at major bourses last month. The scrip, which was quoted on the Bombay Stock Exchange (BSE) at Rs 940 levels a month back, dipped to Rs 833.50 just a few days prior to the announcement of the results.

 

Growth in the scooter segment for the calendar year 1996 is estimated between 7-10 per cent. Analysts opine that some of stocks are overheated at the moment, especially Hero Honda and Maharashtra Scooters, and such scrips should see some profit taking in the coming days.

The first-half of the financial year will be sluggish for the two-wheeler sector. Further, the impending oil price hike is bound to affect the margins of these companies. In the light of these factors, some of these scrips are likely to lose ground, said a research analyst at Mafatlal Securities.

Sandeep Jain from Anagram Securities feels the two-wheeler segment will gain momentum in the third quarter of the year when the budget concessions will actually translate into disposable income.

Also, with the lowering of interest rates, people may be inclined to purchase two-wheelers through auto finance schemes which would improve vehicle offtake, he said.

In the scooter wing, Maharashtra Scooters and Kinetic Honda registered modest gains during the last month while LML Vespa gained marginally. Said an analyst at a leading broking house: LML has been doing well in the premium segment of scooters but this has not been reflected in the price of the scrip. On one hand the company is facing a cash crunch while at the same time it cannot raise the prices owing to stiff competition in the sector. According to analysts, the sharp fluctuation in the share prices of Maharashtra Scooters is not linked to fundamentals as the companys results have been disappointing.

The scrip touched Rs 216.50 at the BSE yesterday from a level of Rs 180 a month back. Said an analyst: The company declared a bonus despite poor results. Since Maharashtra Scooters has a strategic alliance with Bajaj Auto, its performance will depend on that of Bajaj Auto. The Bajaj Auto stock regained some of its lost ground on reports of the proposed bonus issue but fell again later. The scrip closed at Rs 870.75 on the BSE yesterday.

The Hero Honda scrip, too, fluctuated wildly, with the price zooming from Rs 317 on April 12 to Rs 465 yesterday at the BSE.

Although the scrip is considered to be fundamentally strong, marketmen feel that the sharp rise in the stock is due foreign institutional investor interest.

The increased growth rate in the motorbike sector was reflected in the movement of the scrip prices of TVS Suzuki also.

The share moved up from the Rs 370 levels a month back to Rs 400.25 yesterday at the BSE.