To buy to sell Bajaj Auto to share
Bajaj Auto shares rose in early trade on Friday but were back in the red ahead of the launch of the two-wheeler maker’s new electric vehicle production line scheduled for later in the day. On Thursday, the company also announced that its board would consider a stock buyback next week.
Shares of the company gained 2.2% in early trading but quickly fell 2.7% from that level to hit the day’s low of 3,857 rupees. As of 11:18 a.m., the stock was trading down 0.4% at Rs 3,860.50 on BSE.
The downward trend in shares of two-wheeler manufacturers comes as inflation fears grip investors around the world. US inflation data later in the day should further affect global markets.
Analysts expect the offer to be at a healthy premium.
Bajaj Auto has $750 million of cash on its books as its capital expenditure needs remain low. Its FY22 capital expenditure was $75 million.
Global brokerage Morgan Stanley has an equal weight rating on the stock with a target price of Rs 4,182 per share.
“Looking at previous takeovers such as Tata Consultancy Services (TCS) and agrochemical company UPL, the offer price was more than 15% above the market price. Assuming a similar trend, we believe Bajaj’s share price could rise in the near term,” the brokerage said.
Bajaj Auto is launching a new electric vehicle production line at its plant in Akurdi, Maharashtra, on Friday. In November 2021, the company announced that it would invest Rs 300 crore in a new EV unit to increase production of Chetak and future EV products to 500,000 per year.
Chetak EV will be produced at the factory where the Chetak IC scooter was manufactured until 2005. Bajaj Auto has an order book of approximately 16,000 Chetak EVs due to shortage of supply. The new electric vehicle factory will initially have a capacity of 400 units per day. Meanwhile, the production of electric vehicles will continue simultaneously in Chakan for some time.
First post: STI