SENSEX NIFTY
Dec 13, 2012, 10.32 PM IST | Source: Moneycontrol.com

Lesser-known Bajaj stock that could be a multibagger

In the 70’s Bajaj Auto made its mark in the two wheeler segment by manufacturing Bajaj Chetak/Super brand in collaboration with Maharashtra Scooters.

Riken Mehta
Moneycontrol.com

In the 70’s Bajaj Auto made its mark in the two wheeler segment by manufacturing Bajaj Chetak/Super brand in collaboration with Maharashtra Scooters . The company launched it with the famous punchline “Hamara Bajaj” and went on to become the number one selling scooter in the country. LML Vespa was Bajaj’s closest competitor for the company.

With the advent of new technology, scooters became old fashioned and bikes came into prominence. In 2009, Maharashtra Scooters discontinued its scooter manufacturing operations. The company had no operating revenues since then.

So why is stock trading at life time high? The answer lies in the investments made by the company. Maharashtra Scooters holds a sizeable chunk of Bajaj Group companies (see below table).

The cost of investments is Rs 105 crore and the current value of investment is Rs 2225 crore. It has no debt on its books. The company also made investments in mutual funds and bonds worth Rs 101 crore. So if one sums up the current investment value with mutual funds investment and cash balance, divided by total number of shares, the fair value of stock turns out to be Rs 1955, a whopping 290% premium compared to its current market price. 

Also, there has been constant speculation that Bajaj Auto might be interested in buying out 27% stake of co-joint promoter- Western Maharashtra Development Corporation.

All figures (Rs in Cr)

Company Name No of Shares Face Value Investment Amount Latest Price Market Value
Bajaj Hindusthan Ltd. 1255000 Rs.  1.00 0.45 26.7 3.35
Bajaj Finserv Ltd. 3387036 Rs.  5.00 17.67 910.7 308.46
Bajaj Auto Ltd. 6774072 Rs.  10.00 18.25 2055.5 1392.41
Bajaj Finance Ltd. 1638720 Rs.  10.00 21.61 1303.4 213.59
Bajaj Holdings & Investment Ltd. 3387036 Rs.  10.00 46.65 906.35 306.98
Total     104.62   2224.79

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