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Bajaj Auto stellar Q4 show overshadowed by valuation concerns, shares skid 3.5%

19 Apr , 2024   By : Debdeep Gupta


Bajaj Auto stellar Q4 show overshadowed by valuation concerns, shares skid 3.5%

Shares of Bajaj Auto Ltd fell 3.5 percent to Rs 8,702 on April 19 as brokerages worried over the stock price outpacing their target prices and shared their concern over expensive valuations.

Despite delivering a robust financial performance for Q4 FY24 and surpassing the Street estimates, the company faced downward pressure on its shares.

As of 11 am, Bajaj Auto shares were trading 3 percent lower at Rs 8,735. Bajaj Auto shares have doubled in the past year and have risen nearly 60 percent in the past six months.

Although Bajaj Auto saw gains for the past seven months since September 2023, it has witnessed a nearly 5 percent decline in its stock value so far in April.

While brokerages lauded Bajaj Auto's stellar earnings report for January-March, many maintained a 'sell' rating on the stock, citing target prices significantly lower than the current market value. There's particular caution surrounding the export business, with expectations that the stock's rally may fade as most positives are already factored into the price.

Analysts at CLSA even issued a 'sell' recommendation, citing overvaluation following the recent rally. Similarly, analysts at Kotak Institutional Equities echoed concerns, suggesting that the stock's upside potential is limited.

In terms of financial performance, Bajaj Auto reported an 18 percent year-on-year increase in net profit to Rs 2,011.4 crore for the March quarter. Revenue also surged 30 percent year-on-year to Rs 11,249.8 crore.

Additionally, EBITDA witnessed a robust 34.4 percent year-on-year growth, with operating margins expanding by over 180 basis points to 19.7 percent in Q4.

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