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Buy Bajaj Auto, target Rs 3,200: Yes Securities

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Trending on et - budget 2019 full coverage »ETMarkets.com|Updated: Feb 03, 2019, 02.37 PM ISTThe current market price of Bajaj Auto is Rs 2,602.70.Yes Securities has a buy call on Bajaj Auto with a target price of Rs 3,200. The current market price of Bajaj Auto is Rs 2,602.70. Time period given by the brokerage is one year when Bajaj Auto price can reach the defined target.

Investment rationale by the brokerage-Margins to improve, valuations attractive: Bajaj Auto expects significant improvement in margins (80bps) from Q1 FY20.

This would be driven by (1) substantial improvement in Rupee realization to Rs71/$ as compared to Rs 68.9/$ in Q3 FY19, (2) higher share of Platina that would lead to breaking even of M1 category for Bajaj Auto, (3) the recent decline in commodity prices and (4) hike in prices of CT100 back to the pre-discount levels in some markets.

Over the next couple of years, the company expects domestic volumes to witness 8-10 per cent volume growth and export volumes to see 10-12 per cent growth.

Considering this, we expect Bajaj Auto to report a FY18-21E earnings CAGR of 13.7 per cent.

FY21E P/E of 12.1x appears attractive.

We assign a BUY rating with a 1-year price target of Rs 3,200. Read this article in :Hindi Trending on et - budget 2019 full coverage »Buy ICICI Bank, target Rs 483: Yes SecuritiesBuy Sagar Cements, target Rs 919: Yes SecuritiesIIFL wealth management team moves to Yes SecuritiesBuy UltraTech Cement, target Rs 4,510: YES SecuritiesCommenting feature is disabled in your country/region.Disclaimer: This recommendation is analyst's own and does not represent those of economictimes.com ETMarkets.com.

Please consult your financial advisor before taking any position in the stock/s mentioned.




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