Buy Bajaj Auto: target of Rs 4800: Sharekhan

Sharekhan is bullish on Bajaj Auto has recommended buy rating on the stock with a target price of Rs 4800 in its research report dated April 28, 2022.

Broker Research

April 30, 2022 / 11:39 AM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

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Sharekhan's research report on Bajaj Auto

The stock trades below the historical average P/E multiple of 15.3x and EV/EBITDA multiple of 10x its FY2024E. BAL reported better-than-expected operational performance during Q4FY2022, led by higher average sales realisation, improved product mix, improved USD realisation, and deferral of material cost increase. Management remains positive on growth prospects, especially exports, where BAL expects to further strengthen its market share across regions, driven by brand recall, product launches, and improving product mix. We expect BAL’s earnings to report a 24% CAGR during FY2022-FY2024E, driven by a 15.3% revenue CAGR and a 250-bps improvement in EBITDA margin from 15.9% in FY2022 to 18.4% in FY2024E.

Outlook

We maintain our Buy rating on Bajaj Auto Limited (BAL) with an unchanged PT of Rs. 4,800, factoring strong business outlook and comfortable valuations.