Neutral on Bajaj Auto, target price Rs 3875: Motilal Oswal

Neutral on Bajaj Auto, target price Rs 3875:  Motilal Oswal

Motilal Oswal has neutral call on with a target price of Rs 3875. The current market price of Bajaj Auto Ltd. is Rs 3616.

Bajaj Auto Ltd., incorporated in the year 2007, is a Large Cap company (having a market cap of Rs 106038.54 Crore) operating in Auto sector.

For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 9279.06 Crore, up 24.69 % from last quarter Total Income of Rs 7441.66 Crore and up 15.90 % from last year same quarter Total Income of Rs 8005.88 Crore. Company reported net profit after tax of Rs 1555.30 Crore in latest quarter.

Investment Rationale
The brokerage lowers EPS for FY22/FY23E by 2%/4%, factoring in lower other income on account of higher dividend payout. Bajaj Auto would benefit from a) the premiumization trend and b) good growth opportunity in exports. While domestic 3W recovery may be delayed, it is vulnerable to possible disruption from electrification. Valuations at 18x/17x FY22/FY23E consol. EPS largely captures the strong growth momentum. It maintains Neutral, with TP of INR 3,875 (~18x Mar’23 consol EPS).

Promoter/FII Holdings
Promoters held 53.7 per cent stake in the company as of Dec 30, 2020, while FIIs held 13.1 per cent, DIIs 9.1 per cent and public and others 24.1 per cent.

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