21 Sep , 2021 By : Kanchan Joshi
Bajaj Auto remains the second largest player in the domestic motorcycle segment and continues to be the largest exporter of two-wheelers in India, Axis Securities said in a note as the two and three-wheeler manufacturer is its top stock pick for this week with keeping in mind an ideal investment horizon of 6-9 months.
The domestic brokerage firm believes that Bajaj Auto is well placed to capitalize on demand normalization and premiumization trends in the 2W industry which should support profitability and operational performance going forward. Moreover, “we expect the company to gain further market share in exports, driven by its market leadership, brand equity, and enhanced distribution network," Axis Securities said.
Bajaj Auto remains its preferred pick in the 2W segment given reasonable valuations and strong medium- term growth prospects. The brokerage has a Buy rating on the stock with a target price of Rs4,250 per share.
Axis Securities expects the auto major to deliver profitable growth going ahead on the back of improvement in domestic 2W profitability on account of a richer product, higher contribution of 3W as the economy normalizes and sustained cost reduction efforts by the company. “Export is the most significant contributor to Bajaj Auto’s strong recovery. The company’s 2W exports are outperforming its domestic sales, driven by market share gains in major export markets."
Bajaj Auto will be following a 3-fold strategy to gain market share in the domestic 2W market - aggressive product launches in 125 cc segment, retaining dominant position in the sports motorcycle segment and providing innovative offerings in top-end of the entry motorcycle segment.
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