Shares of leading two-wheeler player Bajaj Auto are higher by over 3% in early after chairman Rajiv Bajaj assured of double-digit growth in the +125cc segment during the festive period this year, allaying concerns that emerged over a weak commentary after the September quarter results, and added that he is buying the dip in the stock.
In a conversation with CNBC-TV18, Rajiv Bajaj on October 21 said that by the end of the year, the growth picture for the festive season will be more 'holistic'.
"By early December, Bajaj Auto may turn around and say growth is in double digit (In the +125cc segment) and not in single digit."
Bajaj played down the stock price reaction after the results, saying the selloff was due to a 'some what temporary understanding' of how the festive sales were being captured. "A stock that has grown 100% in last 12 months has to correct at some point, but I stand by my projection of Rs 20,000 as the long term target (for the share price). I am certainly going out and buying the stock. Something that corrected 20% perhaps based on some what temporary understanding of an evolving situation presents a nice upside for things to come," Rajiv Bajaj said.
He said the company remains unfazed with the volatility in the share price. "It is typical for the stock market to lag for some time and then suddenly rise. This is the volatility in the cycle which allows people to make money when they buy and sell. That is the nature of the beast, We have to stay focused on the motorcycle market."
Last week, shares of Bajaj Auto took a sharp knock, falling more than 10% on concerns over weak commentary around this year's festive sales.
Rajiv Bajaj said the retail sales numbers with dealerships across states varies with the two-wheeler registration number that the official Vahan website puts out, and this trend gets accentuated during the festive period.
"On the day of the board meet, Vahan the registration was only two-third of the dealer registration. This happens every few years, especially in a festive month where there is Dussehra and Diwali. That tends to overwhelm RTOs and dealerships," Rajiv Bajaj added.
"A company's portfolio cannot go sour overnight in a particular month. Based on our understanding, we are growing 40% faster than the industry growth rate in the +125cc segment for last so many quarters."
Rajiv Bajaj said the 100 cc market is seeing deep discounts by two of its largest rivals, but since this is not a focus area for Bajaj Auto, the company is not offering a Rupee discount in this segment. "One may see that 100cc sales may show an uptick (due to rival discounts) and their share may also rise. This is preponement as you don't change customer trend with a Rs 5,000 discount on a Rs 1 lakh product," he added.
When asked if the company will clocked double-digit sales in the festive period, Rajiv Bajaj assured that the 125cc segment and above, where Bajaj Auto has significant presence, the company will deliver. "In the +125cc segment, certainly. That may not be the case in the 100cc segment, but if I may say so, I couldn't care less. Particularly for the Freedom and Chetak, the growth is going to be tremendous." Bajaj also bet on a 'handsome' three-wheeler growth in this period, along with strong exports numbers.
Rajiv Bajaj also said the company has no plans to cut back on production, and they are going 'flat out in October and November'. The monthly exports too are looking upbeat, driving the production trend, he added.
Very importantly, the company plans to participate in the e-rickshaw segment next fiscal, and Rajiv Bajaj said this could take Bajaj Auto's 3-three wheeler business to a new level.
Bajaj Auto said that by mid to end November and up to January next year, Bajaj Auto will 'refresh' the entire Chetak portfolio, and offer more to customers. "We have seen a reduction in cost with 3rd-4th generation Chetak, and we are improving on the learning curve," he added.
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