Moneycontrol Bureau
Investors continued to sell shares of Bajaj Auto on Friday after brokerage house CLSA maintained underperform rating on the stock, citing structural as well as cyclical headwinds. The stock fell more than 2 percent intraday, in addition to 1 percent loss in previous session.
While retaining target price of Rs 2,170, the brokerage slashed FY16-17 earnings per share by 15-18 percent factoring in lower volumes/margins.
CLSA recommends holders of Bajaj Auto to switch to 4-wheeler stocks (Maruti/Tata Motors/Mahindra & Mahindra).
"Bajaj is facing a combination of structural (collapse of Discover) and cyclical (slowing exports) headwinds. FY16 is likely to be the fourth successive year of declining volumes for Bajaj, even after giving some benefit of doubt to new products," the brokerage explained.
Bajaj Auto reported a 21 percent decline in motorcycle sales at 2,16,077 units in February 2015. Its exports declined by 20 percent during the month to 1,12,909 units from 1,42,009 units in the corresponding year-ago period.
The company's total vehicle sales last month stood at 2,43,319 units, down 22 percent, as against 3,13,294 units in the same month a year earlier.
According to the note, however, FY17 should hopefully be better as exports recover with a lag and Discover volumes bottom in FY16.
At 11:22 hours IST, the scrip of Bajaj Auto was quoting at Rs 2,031.10, down Rs 46.75, or 2.25 percent on the BSE.
Posted by Sunil Shankar Matkar
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