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To be sure, out of 46 analysts’ recommendations over the counter, 30 are still buy calls, another 13 suggest a hold over the counter and Reliance Securities’ downgrade comes mainly on account of a possible slowdown in export business.
On Tuesday, the stock gained 0.46 per cent to Rs 3880 per piece.
On share buybacks, Reliance Securities said the maximum repurchase size of Rs 2,500 crore was lower than the market expectation. It said that Bajaj Auto’s decision to opt for open market buying is disappointing for investors as the effective buyback price will be well below the upper band of Rs 4,600. This is assuming a buyback at Rs 4,000 per share, which would translate to a reduction in share count of 2.16 per cent, resulting in the same amount of EPS accretion.
“However, our recent channel checks in Africa indicate a sharp decline in consumer spending amid high inflation, a sharp rise in vehicle prices and a severe slowdown in the region due to currency devaluation,” it added. hopes. Condition.
The brokerage has cut its export volume estimates for FY23 and FY24 by 16 per cent and 14 per cent respectively.
“Furthermore, due to slower than expected recovery in domestic 2Ws and factoring market share losses, we reduce our domestic volume estimates by 4 per cent for FY23 and 0.5 per cent for FY24, resulting in an increase in our overall volumes by 11 per cent and 8 per cent. Percentage declines. Estimation. With the number of shares reduced after the buyback, our FY24E EPS declined 7 per cent to Rs 222. We reduced our valuation on FY24E EPS from 17 times to 16 times and for the stake in 200 per share. Subsidiary, PMAG (KTM’s holding company),” said the brokerage.
Neeraj Dewan, director, Quantum Securities, told ET Now that the share buyback was earlier deferred as the company was in two minds. He said that even with the kind of buybacks they have announced now, it seems that they were still in two minds.
The company had earlier deferred the proposal on June 14, saying the board needed more time to finalize the details.
“So one, the price is much lower than what the Street expected and then it’s a market buyback and not a tender-based buyback. Those are the two things that frustrate the Street. But then the tailwind of the auto space and the correction in the commodity price It is with the stock. You may not see a correction in the stock.”
There is a slowdown in the city regarding Bajaj Auto. It has a ‘Sell’ rating over the counter with a target price of Rs 3,400. Bajaj Auto’s capital expenditure has been quite low and it has a well-structured dividend policy, adding that the company is losing some market share in the domestic market.
The broker said the bike maker is also facing difficulties in select export markets.
Emkay has reduced its target price to Rs 3,750 from Rs 4,250 earlier. “In view of the significant cut in high margin export business, slow recovery in domestic trade, reduction in market share in domestic and overseas markets as well as the recent run-up after premium valuations making the recent run-up risk-reward unfavourable, we downgrade
From buying to selling,” said.
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)
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