Bajaj Auto share price hits all-time high, experts expect further upside
Bajaj Auto's share price reached an all-time high of ₹5,149, outperforming the auto index and Nifty in the past year.
Bajaj Auto share price jumped over 5 per cent to hit its fresh all-time high of ₹5,149 in trade on NSE on Friday (September 15). The stock opened at ₹4,894.90 against the previous close of ₹4,844.50 and jumped to its fresh record high with nearly 17 lakh shares changing hands on NSE.
The stock closed at a record high level, with a gain of 6.29 per cent higher at ₹5,149.
The stock saw sharp gains today amid reports that global brokerage firm BoFA Securities upgraded the stock to a ‘buy’ from a 'neutral'.
CNBC-TV18 reported that BoFA Securities upgraded Bajaj Auto stock to a ‘buy’ from a 'neutral' earlier and raised the target price also to ₹5,550 from ₹5,100 earlier, which is nearly 15 per cent upside from the stock's close of ₹4,844.50 on Thursday on NSE.
BoFA Securities, as reported by CNBC-TV18, believes multiple growth drivers are at play for Bajaj Auto. "The growth would be mainly driven by 2Es - exports and electric - which are the main reasons for valuation and re-rating. Believe all business segments are now well set for positive growth in F25 with exports turning the corner," CNBC-TV18 reported BoFA Securities saying so about Bajaj Auto.
Sharp gains in Bajaj Auto share price had a rub-off effect on other auto stocks too, as it boosted the Nifty Auto index which rose 1.58 per cent.
The stock has significantly outperformed the BSE Auto index and the equity benchmark Nifty in the last one year. Shares of Bajaj Auto have jumped over 36 per cent while the Nifty Auto index and Nifty50 have gained over 23 per cent and about 13 per cent, respectively, in the last one year.
Experts expect further upside
If we see the PE (price-to-earnings ratio) of the stock, it is currently at 21 which is above the median PE of about 18. PB (price to book value) of the stock at present is 4.67 which is also above the median PB of 3.81.
However, the majority of experts are positive about the stock as most of them expect a significant upside in it.
Gaurav Bissa, VP at InCred Equities pointed out that Bajaj Auto stock witnessed a two-year consolidation breakout on the weekly charts around ₹4,400 level which pushed the stock towards ₹5,000. However, the stock witnessed a profit booking resulting in a drop followed by a time correction.
"The stock took support from 21EMA (exponential moving average) on the weekly charts and the RSI witnessed a retest of breakout on weekly charts pushing the stock towards fresh life high levels. The stock is currently witnessing a swing breakout and a weekly close above ₹5,000 is likely to pave the way towards ₹5,300-5,500 levels in the coming weeks," said Bissa.
Foram Chheda, CMT, and Founder of ChartAnalytics.co.in observed that Bajaj Auto has made a breakout from the resistance zone of ₹4,980- 4,990 levels. The breakout has been accompanied by an increase in volume, supporting the bullishness.
"Since the stock is already up by nearly 5 per cent for the day, one can consider buying 50 per cent at the current levels and add the balance near the breakout levels. The Relative Strength Index (RSI) which is a lead indicator remains in the bullish zone which adds further strength to the stock," said Chheda.
Kapil Shah, a technical analyst at Emkay Global Financial Services pointed out that auto stocks were in correction mode and now they are coming out.
He said Bajaj Auto generally bounces back to a record high whenever there is a correction in it.
"Bajaj Auto stock has fallen 25-28 per cent since 2010. What we are seeing today is a bounce back. If an investor already owns the stock, they should hold it for a target of ₹5,160 and ₹5,450 as per the Fibonacci tool. For fresh buying, there’s a slight concern, keep a tight stop loss of ₹4,500 if you are buying. We see a risk-reward ratio of 1:1," said Shah.
On the other hand, Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, believes one should think about booking some profit in the stock at this juncture.
"The stock is in the process of making a bearish butterfly structure near ₹5,150–5,175 levels on the weekly chart which would act as a massive resistance zone soon. Additionally, on a weekly timeframe, RSI is trying to make some negative divergence," said Patel.
"One should book profits near the mentioned resistance zone and avoid aggressive long bets," Patel said.
Latest business trends of Bajaj Auto
Bajaj Auto reported a 15 per cent year-on-year (YoY) fall in its total sales for the month of August 2023. The company’s total vehicle sales in August 2023 declined to 3,41,648 units from 4,01,595 units in the same month last year.
Total domestic sales during the month declined 20 per cent to 2,05,100 units from 2,56,755 units, while exports fell 6 per cent to 1,36,548 units from 1,44,840 units, YoY.
Bajaj Auto sold a total of 2,85,031 two-wheeler vehicles in August 2023, a sharp drop of 20 per cent from 3,55,625 units sold in August 2022. The fall in two-wheeler sales was led by the domestic market, as domestic two-wheeler sales declined 31 per cent YoY. Exports of two-wheelers rose 2 per cent.
Read more: Bajaj Auto August sales drop 15% YoY to 3.41 lakh units dragged by weak two-wheeler dispatches
For Q1FY24, Bajaj Auto reported a 42 per cent year-on-year rise in its net profit to ₹1,664.77 crore. The company's total revenue from operations rose nearly 29% on year to ₹10,309.77 crores during the quarter ended June from ₹8,004.97 crore in Q1FY23.
Meanwhile, Bajaj Auto's subsidiary, Bajaj Auto Consumer Finance, has received the Certificate of Registration from the Reserve Bank of India (RBI) to start the business of the non-banking finance company (NBFC).
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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