CMP 1712 BSE 16846
TECHNICALS:
On the 2 year Price Charts, Bajaj Auto seems to reflect a positive trending tenor. On the downside, it has good support at 1658 followed by 1629 and then at 1580. On the upside, the first resistance is at 1715 (interestingly just a little above CMP) followed by a major supply zone in the 1729-1740 range. In the last six months it has run up significantly from 1300 odd levels to 1700 plus levels. Therefore even though the general Chart tone is positive but there could be a period of consolidation in the short to medium term. The SMA 365 forms a multi-year solid support for the scrip and is currently at 1438 levels.
FUNDAMENTALS:
Many Analysts now look upon the Two-Wheeler manufacturers as a proxy to India's hinterland growth story, if one might call it that. This view is not without substance, since the growth of disposable incomes as well as aspirations in the mofussil and rural areas is indeed a reality. This has been clearly recognised by the Markets and the Stock Price has seen steady growth in the last 2 years in general and the last 10 months in particular. This point is also borne out by a comparison of the 2 year price movements vs the 5 year price movements wherein it is evident that the Markets have quietly re-rated the Scrip upwards in the last 1-2 years. Unfortunately a lot of retail investors have also missed out on this rally in this Scrip and most Portfolios are replete with FMCG bought at bloated valuations and a negligible presence of the 2 wheeler outperformers.
Anyway, looking specifically at Bajaj Auto, the significant Brand prowess as well as the growing demand catchment mentioned above are a given positive for the Stock. Results in the last couple of Quarters have been good on topline growth but muted on the Bottom line due to the adverse Rate regime, business environ as well as pressures emanating from input pricing. However, rather surprisingly, export contribution has been a definite positive. The fall in the value of the Rupee is also seen shoring up profitability. At CMP 1714 (52 wk high 1823, 52 wk low 1165), the Stock is trading at a PE TTM of 14.14x. Latest monthly sales figures for November 2011 have been upbeat and a plateauing off in Input costs together with strong Export performance could see the Company do an EPS FY12E of 125 approx. This puts it currently at about 13.7x FY12E, which is not expensive given the demand macros. However, as mentioned earlier, the scrip has run up appreciably in the last six months and a bout of consolidation seems to be in the offing.
Thus, the long term investor could buy some quantity at CMP 1700 odd and then add more on dips to get an average entry price as close to 1550 as possible. Steady upsides of 15-20% are very much likely over the next 12 months.
BAJAJ AUTO Q2 FY2012 RESULTS SEE HERE AND HERE
TECHNICALS:
On the 2 year Price Charts, Bajaj Auto seems to reflect a positive trending tenor. On the downside, it has good support at 1658 followed by 1629 and then at 1580. On the upside, the first resistance is at 1715 (interestingly just a little above CMP) followed by a major supply zone in the 1729-1740 range. In the last six months it has run up significantly from 1300 odd levels to 1700 plus levels. Therefore even though the general Chart tone is positive but there could be a period of consolidation in the short to medium term. The SMA 365 forms a multi-year solid support for the scrip and is currently at 1438 levels.
FUNDAMENTALS:
Many Analysts now look upon the Two-Wheeler manufacturers as a proxy to India's hinterland growth story, if one might call it that. This view is not without substance, since the growth of disposable incomes as well as aspirations in the mofussil and rural areas is indeed a reality. This has been clearly recognised by the Markets and the Stock Price has seen steady growth in the last 2 years in general and the last 10 months in particular. This point is also borne out by a comparison of the 2 year price movements vs the 5 year price movements wherein it is evident that the Markets have quietly re-rated the Scrip upwards in the last 1-2 years. Unfortunately a lot of retail investors have also missed out on this rally in this Scrip and most Portfolios are replete with FMCG bought at bloated valuations and a negligible presence of the 2 wheeler outperformers.
Anyway, looking specifically at Bajaj Auto, the significant Brand prowess as well as the growing demand catchment mentioned above are a given positive for the Stock. Results in the last couple of Quarters have been good on topline growth but muted on the Bottom line due to the adverse Rate regime, business environ as well as pressures emanating from input pricing. However, rather surprisingly, export contribution has been a definite positive. The fall in the value of the Rupee is also seen shoring up profitability. At CMP 1714 (52 wk high 1823, 52 wk low 1165), the Stock is trading at a PE TTM of 14.14x. Latest monthly sales figures for November 2011 have been upbeat and a plateauing off in Input costs together with strong Export performance could see the Company do an EPS FY12E of 125 approx. This puts it currently at about 13.7x FY12E, which is not expensive given the demand macros. However, as mentioned earlier, the scrip has run up appreciably in the last six months and a bout of consolidation seems to be in the offing.
Thus, the long term investor could buy some quantity at CMP 1700 odd and then add more on dips to get an average entry price as close to 1550 as possible. Steady upsides of 15-20% are very much likely over the next 12 months.
BAJAJ AUTO Q2 FY2012 RESULTS SEE HERE AND HERE
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