ICICI Securities recommended hold rating on Bajaj Auto with a target price of Rs 3400 in its research report dated February 06, 2018.
ICICI Securities' research report on Bajaj Auto
In 9MFY18, BAL domestic 2-W volumes have de-grown by 7% when the 2-W industry grew 12% (motorcycle industry growth- 10%). This is because the growth in premium segment (>150 cc) led by Pulsar is more than offset by the steep decline in V & Avenger twin models in 125-150cc. Going ahead, the management expects to end FY18 with 210000 units in March 2018 (Jan 18’-163111 units).
With the first model of Triumph & Husqvarna expected in FY21, we see limited positives for the domestic 2-W business of BAL in the medium term. Non participation in the growing scooter segment and failure of recent launches like Avenger & V12/15 remains a concern for us. We value BAL on an SOTP basis, valuing the core business at 16x FY20E EPS and investment in KTM to arrive at a target price of Rs 3400. We have a HOLD recommendation on the stock.
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