Bajaj Auto - Stock Analysis & Stock Report

LKP Shares, stock trading broker has recommended to buy stocks on Bajaj Auto with target price of Rs 2,100 against current market price (CMP) Rs 1,800.

The stock investment research team of broker said that the company has posted significant growth in Q3FY10. The management is very positive on the company`s growth banking upon the recent launch of Pulsar last month and looking forward to the new launch by April.

Bajaj Auto - Stock Analysis n Stock Report
Market Cap 25,938.14
* EPS (TTM) 89.97
* P/E 19.93
* P/C 18.12
* Book Value 129.23
* Price/Book 13.87
Div(%) 220.00
Div Yield(%) 1.23
Market Lot 1.00
Face Value 10.00
Industry P/E 29.33

Bajaj Auto's results outperformed the street expectations. The company's strong thrust on the entry-level segment has fetched it market share gains. After recording a peak margin of 22% in the last quarter, the company surprised us by maintaining them at the same level.

Going forward, we expect increased input costs to pull down the full year margins to 20.2%. However, the robust volume growth, and cost saving at employee expenses level and marketing costs may somewhat offset this increase. Success of Discover 100cc along with the Pulsar models and the upcoming new launches in the Discover family will provide a strong boost to the topline. Growth in the exports along with new launches in the three wheeler segment will also provide a strong boost to the topline.

At CMP of Rs 1800, the stock is trading at FY11 P/E of 13.2, on an FY11E EPS of Rs 136.5. We believe the stock is looking attractive and hence recommend a BUY rating on the stock with a target price of Rs 2,116, which translates into an upside of ~22%.