Emkay Global Financial has given Buy recommendation for Bajaj Auto with a target price of Rs. 4350 in its research report issued on May 10, 2022

Emkay Global Financial’s report on Bajaj Auto

In an interaction with Emkay, new CFO Mr. Dinesh Thapar reiterated expectations of a strong recovery in domestic 2Ws and an aggressive focus on EVs. He expects domestic 2W recovery from FY23E onward, with signs of a demand pickup in rural, student and salaried segments. BJAUT is focusing on the EV space and has planned a slew of launches in 2Ws/3Ws across various use-cases over the next 2-3 years. In Jun’22, BJAUT plans to launch an E3W and commission an E-2W plant with an annual capacity of 500,000 units. We expect an 11% CAGR in total volumes over FY22-24E, driven by a recovery in domestic 2W/3W volumes (13%/26% CAGR). We estimate revenue/earnings CAGRs of 15%/18% over FY22-24E, with average FCF generation of Rs32bn.

Outlook

We maintain Buy with a TP of Rs4,350 based on 17x Jun’24E Core EPS, value of investments at Rs224/share and cash reserves of Rs725/share. Our target multiple is based on a two-stage DCF model.

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