Arihant capital neutral on Bajaj Auto; target of Rs 2248

Arihant capital markets has recommended a neutral rating on Bajaj Auto (BAL) with a target price of Rs 2248, in its research report dated October 17, 2014.

October 17, 2014 / 16:18 IST

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Arihant capital markets' research report on Bajaj Auto (BAL)

"BAL Q1FY15 results were in line with estimates. Company has incurred a onetime charge of Rs 340.29 on account of National Calamity Contingent Duty (NCCD) which drastically impacted the bottom‐line. However, our long term view on the stock remains positive. BAL’s ambition of becoming global leader in motorcycle is reflected in its global sales and in our view BAL is inching towards its goal with every passing quarter."

"We remain "cautiously optimistic" on Bajaj's business outlook over FY15 & FY16, due to recovery in the domestic 2W segment and strong export growth. We expect its share in domestic 2W segment to decline owing to the increased competition from Honda. However we are quite confident of its export growth momentum to continue. Overall we are cautiously optimistic on company's business outlook for next 2 years."

"We forecast Bajaj's domestic volumes to remain under pressure in 2HFY15 and thus expect domestic volumes to decline by 3% in FY15 and grow by 7% in FY16. Exports on other hand are expected to report ~15%+ volume growth in FY15 as well as FY16. We believe export exposure will help Bajaj Auto to tide over weak domestic market. We assign a price target of Rs 2,284, at 16x FY16 EPS of Rs 143 per share, and have a “NEUTRAL” rating on this stock", says Arihant capital markets research report.

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