Bajaj Auto shares gain for 12th straight day, surge past ₹10,000 milestone – here’s why

Bajaj Auto's shares hit a new high of 10,038 apiece, marking a 0.77% gain. The stock has surged by 47% this year and 115% over the past year. Auto stocks are booming due to rural spending expectations and improved sentiment.

A Ksheerasagar
First Published18 Jun 2024, 12:16 PM IST
Domestic brokerage firm LKP Securities remains cautiously optimistic about the auto sector, prioritising two-wheelers (2Ws), followed by passenger vehicles (PVs) and commercial vehicles (CVs).
Domestic brokerage firm LKP Securities remains cautiously optimistic about the auto sector, prioritising two-wheelers (2Ws), followed by passenger vehicles (PVs) and commercial vehicles (CVs). (Abhijit Bhatlekar/Bloomberg News.)

Continuing their triumphant run for the 12th successive trading session, shares of Bajaj Auto, one of the leading manufacturers of motorcycles and 3-wheelers, crossed the 10,000 mark for the first time in today's trade to hit a new all-time high of 10,038 apiece by gaining 0.77%.

The stock's surge today has propelled it to achieve a 47% gain in the current year so far and an 115% increase over the past one year. Starting from its low of 3,636 per share in March 2023, the stock is currently trading at a remarkable 174% increase. 

In the current year so far, the company's market capitalisation surged from 1,89,221 crore to 2,78,202 crore.

Also Read: Bajaj Auto, M&M, Ashok Leyland among preferred picks as auto stocks race ahead

The recent surge in auto stocks to new record highs has been propelled by several key factors, prominently bolstered by increased investor confidence. Expectations are rising that the new coalition government, comprising the BJP and its allies, will prioritise rural spending over capital expenditure, diverging from previous strategies.

Increased investment in rural areas typically translates into higher disposable incomes for rural consumers. Given that two-wheelers are popular modes of transportation in rural regions, this surge in disposable income could significantly boost demand for two-wheelers.

Moreover, two-wheeler sales showed improvement in May, supported by improved sentiment, the absorption of price hikes, new model launches, and a gradual recovery in rural markets, resulting in robust year-to-date growth.

Also Read: Auto stocks in top gear: What's driving the rally? Experts recommend 10 stocks to buy from the sector

Despite challenges such as the Red Sea crisis, two-wheeler exports demonstrated solid year-on-year growth. Temporary softness observed in the sector during May was attributed to union elections nationwide, with expectations of a rebound in growth anticipated for June.

Domestic brokerage firm LKP Securities remains cautiously optimistic about the auto sector, prioritising two-wheelers (2Ws), followed by passenger vehicles (PVs) and commercial vehicles (CVs). 

"Within the 2Ws, we like Bajaj Auto more than its other two rivals as we see green shoots in the exports now (36.7% of total volumes). Also, the EV strength gaining from Chetak and launch of e-3W can be additional positives," said the brokerage. 

Also Read: Hero MotoCorp stock jumps over 3% to hit new record high, crosses 5000 mark – here's why

Additionally, significant launches in the premium motorcycle segment (including collaborations with KTM and Triumph) are expected to contribute positively to sales figures. Leadership in the three-wheeler (3W) market is expected to bolster profitability in this segment, the brokerage added. 

On a YTD basis, though Bajaj Auto has grown by 7.6%, May witnessed a subdued performance on the back of elections. In the 2W segment, Bajaj reported de-growth of 3.3% YoY and 13.2% MoM for its domestic motorcycles, while export motorcycles rose by 3.8% YoY and fell by 6.2% MoM on the continuation of Red Sea imbroglio.

Also Read: Modi 3.0: Can auto stocks deliver PSU stocks like returns in long term?

The three-wheeler (3W) segment saw a domestic year-on-year increase of 9.4%, driven by strong uptake in the CNG portfolio and electric three-wheelers (e-3Ws). However, exports of three-wheelers experienced a decline of 5.5% year-on-year.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.

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News in Numbers

Numbers that help you understand news better
₹295 Cr

$23 B

$65 M

3.36%

$65.47 B

$2.5 M

₹80 Cr

1.4%

₹773 Cr

₹2,705 Cr

₹1 Cr

₹14,370 Cr

₹5.74 T

First Published:18 Jun 2024, 12:16 PM IST
HomeMarketsStock MarketsBajaj Auto shares gain for 12th straight day, surge past ₹10,000 milestone – here’s why

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