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Buy Bajaj Auto: PINC Research

Posted on: April 7th, 2009 and is filed under Brokerage Recommendations.

PINC Research has maintained its buy rating on Bajaj Auto in its April 02, 2009 research report. “Bajaj Auto sales for the month were lower than our expectations with larger decline in exports volumes. Overall 2-wheeler volumes for the month were lower by 14.6% to 133k units.

This is a further improvement over the last month decline which stands at 17%. XCD-135 volumes for the month were 22k units. Exports declined by 3.6% and company expects that exports will revive by June’09. However, for the full year FY09 BJAUT registered an export growth of 31.4% to 631k units on back of a strong performance during the period March-Janaury ’09.”

“We believe that despite the volume slump BJAUT is well placed to improve its profitability due to steep decline in low margin entry level motorcycle segment. With higher exports realisation and richer product mix, we expect margins to expand during the next year. The stock is trading at 9.6x FY10E adjusted earnings and we maintain our ‘Buy’ recommendation,” says PINC’s research report.

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