Bajaj Auto share price gains on robust sales in May; ICICI Securities maintains 'buy'

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Bajaj Auto share price gained over 2 percent in the morning session on June 1 after the company declared its auto sales numbers for the month of May.

Domestic sales jumped 52 percent to 60,830 units against 40,074 units in May 2020. Its total 2-wheeler sales were at 2.40 lakh units against 1.13 lakh units year-ago.

The automaker reported exports of 2.11 lakh units against 87,054 units in May 2020.

The total 3-wheeler sales stood at 31,308 units against 14,330 unitss in May 2020 while the total sales came in at 2.72 lakh units against 1.27 lakh units year-ago.

The stock was trading at Rs 4,306.00, up Rs 116.50, or 2.78 percent. It has touched an intraday high of Rs 4,328.00 and an intraday low of Rs 4,227.75.

Research and broking firm ICICIdirect has a buy recommendation on the stock with a target of Rs 4,500 per share.

"We build 22.2 percent, 15.5 percent sales, PAT CAGR in FY21P-23E. We value Bajaj Auto at unchanged target price of Rs 4,500 using the SOTP method (core business at 21x FY23E EPS and 2x P/B on KTM investment)," the brokerage firm said.

Bajaj Auto is stepping up product development to make up for the delay in FY21 and has lined up multiple launches for the year, including motorcycles sporting new platforms.

The Pune-based company has done three launches, so far, in the year and aims to deliver new models over the next six months, a top company official has told said to analysts.

“We are accelerating our product programmes so that it recovers some of the lost ground of last year. We have already made three introductions like the CT110X and the Pulsar NS125. Within six months, we will be putting out newer platforms and newer variants and this will be a significant thrust in FY22," Bajaj Auto executive director Rakesh Sharma said.

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