Motilal Oswal has given Neutral recommendation for Bajaj Auto with a target price of Rs. 3875 in its research report issued on Mar 18, 2021

Motilal Oswal’s research report on Bajaj Auto

Bajaj Auto (BJAUT)’s board has approved a new dividend policy that links dividend payout to the level of cash/cash equivalents, in turn increasing the payout to 90% of PAT (against 50% payout in the old policy). Considering a) strong operating cashflows, b) limited avenues to deploy cash on the books, and c) declining yields on treasure, this is a step in the right direction and could lead to a rerating.

Outlook

Valuations at 18x/17x FY22/FY23E consol. EPS largely captures the strong growth momentum. Maintain Neutral, with TP of INR3,875 (~18x Mar’23 consol EPS).

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