Hold Bajaj Auto; target of Rs 3910: ICICI Direct

ICICI Direct's research report on Bajaj Auto

Bajaj Auto (BAL) is the second largest motorcycle manufacturer, largest 3-W OEM domestically (FY22 market share at 18.2%, 61.5%, respectively). Exports comprised ~58% of FY22 volumes; 2-W:3-W mix at ~89:11 (overall) • Strong b/s with ~Rs 15,500 crore cash on books (H1FY23), history of ~20% return ratios & one of the highest dividend yields among Nifty stocks.

Outlook

We maintain HOLD rating on BAL primarily tracking slower pace of volume recovery in both domestic and export markets, delay in electric -3-W launch. Revising our estimates, we now value BAL at Rs 3,910 on SOTP basis (16x PE on FY24E Core EPS, stake in PMAG; previous target: Rs 4,180).