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Home > News > Report

Bajaj Auto up

June 20, 2003 13:35 IST

Bajaj Baja Auto was the subject of buying support today as the market reckons a good monsoon should set off increased demand for the company's two-wheeler offerings.

As a result, the scrip of the two-wheeler maker climbed 2.01% to Rs 556 by 11:30 IST. This was a march on its day's low of Rs 536. It had also struck a high of Rs 560 today, however. A total of 11,314 Bajaj Auto shares were exchanged on BSE by 11:30 IST. Bajaj Auto has now risen 21% from Rs 459.40 on 15 May 2003.

The last few sessions have seen solid accumulation in the stock from domestic funds as well as FIIs. This has been prompted by the satisfactory monsoon so far. With the monsoon initial proving good , expectations are that an overall satisfactory monsoon will bring in increased agricultural incomes and, thereby, a rise in demand for two-wheelers. The company derives 60-65% of its revenue growth from rural areas.

Meanwhile, front running on expectations that June 2003 vehicle sales will be encouraging is also pushing up the counter.

Also, the long-drawn family feud between Rahul Bajaj and Shishir Bajaj has been resolved. Earlier, the stock's movement was constrained over concerns that Shishir Bajaj would sell his Bajaj Auto stake in the open market, thus pressuring the scrip's valuation.

For May 2003, Bajaj Auto reported a 5.9% decline in total sales of two- and three-wheelers to 1,27,156 units compared to 1,35,126 units sold in the same month last year. Sales of two-wheelers fell 8.3% to 1,10,726 units (1,20,795 units in May 2002), while that of three-wheelers rose by 14.6% to 16,430 units (14,331 units). Motorcycle sales grew 8.6% to 87,217 units (80,275 units) in May 2003.

The company is targeting a 16% growth in three-wheeler sales and a 30% increase in bike sales this fiscal (2003-04).

In its latest initiative, Bajaj Auto will soon launch its Kawasaki world bike, code-named 612. The bike will be priced at around Rs 43,000 and will aim at competing with the Fiero F2 of TVS and Hero Honda's Ambition. The company hopes to launch its next big offering in the executive segment. This is expected to drive volume growth this fiscal instead of the low-margin entry-level segment, by end-July.

The company aims at reducing its dependence on the price-competitive and discount-heavy entry level segment through greater emphasis on the executive segment, which offers better margins.

The aggressive pricing of its new 125 cc bike would be significant in the company's big push in the executive segment. In the entry-level segment, it reduced the prices of its Boxer C by Rs 2,000 following the launch of the CD-Dawn by Hero Honda. Bajaj's strategy from here on will be a combination of tactical marketing schemes and segment-straddling products/variants.

New launches by the company will include a Pulsar variant, and a brand new all-local bike code-named K60, in the 130-140 cc range. The former should debut end-July while the latter's launch is undecided.

For FY 2002-03 , Bajaj Auto registered a net profit of Rs 538.40 crore (Rs 521.10) on a total turnover of Rs 5,070.50 crore (Rs 4,402.70 crore).

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