While Bajaj Auto's Q3 results were impressive, its export numbers remain weak, and the management expects that to continue "due to adverse macroeconomic environment," analysts at HDFC Securities and ICICI Direct noted.
The Bajaj Auto Analyst: Analysts at HDFC Securities led by Aniket Mhatre maintained their ‘reduce' rating for the stock, revising up price target from from ₹3,743 to ₹3,857.
The Analyst team at ICICI Direct led by Shashank Kanodia also increased the target price from ₹3,910 to ₹4,100 and maintained the ‘hold' rating.
The Bajaj Auto Thesis: In the latest research note, HDFC Securities said that the vehicle manufacturer's net profit increase of around 23% at ₹1491.4 crore this quarter beat its estimates aided by "better-than-expected" average selling price (ASP) and a varied product mix.
ICICI Direct also attributed the growth in parts to the richer product mix that drove the ASP up by 7% quarter-over-quarter.
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Both the Analysts, however, expressed concern over the slow sales recovery in export markets. ICICI Direct lowered its export volume projections as the management said it expects the company's largest export market Nigeria to remain muted. HDFC Securities pointed out that the export numbers are also "affected by the devaluation of local currency and erosion of purchasing power in Bajaj Auto's key regions."
Another area of concern for analysts at HDFC Securities is that the company seems to be lagging behind other market players in the EV segment. However, ICICI Securities expects the two-wheeler major to catch up as it ramps up productions in "electric 2-W space, and expands its network to 100 cities by April 2023."
Price Action: Driven by the strong third quarter results, Bajaj Auto Shares closed 6.01% higher at ₹3941.00 on Friday.
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