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Shares of Bajaj Auto Ltd. reached a record high of Rs 7,059.75 today, fueled by recently posted robust December sales figures. The stock surge reflects investor confidence in the company’s future prospects, bolstered by its consistent financial performance and strategic initiatives.
The Board of Directors will consider a proposal for a share buyback at its upcoming meeting on January 8th. This potential buyback program, if approved, would involve the company repurchasing its own shares from the market, which can boost the stock price by reducing supply and increasing demand. The news of the proposed buyback, coupled with Rahul Bajaj’s hint of a potentially larger buyback due to strong cash reserves, further propelled the stock upwards.
Share buybacks, a strategic financial move, offer several advantages. They signify confidence in the company’s financial strength, enhancing investor trust. Moreover, buybacks efficiently utilize excess cash, making the stock more appealing to investors. This move also enhances earnings per share (EPS) and return on equity (ROE), unlocking shareholder value.
| Particulars | Dec-23 | Dec-22 | Change (%) |
| 2 Wheelers | |||
| Domestic | 1,58,370 | 1,25,553 | 26% |
| Exports | 1,24,631 | 1,21,499 | 3% |
| Sub-Total | 2,83,001 | 2,47,052 | 15% |
| Commercial vehicles | |||
| Domestic | 32,549 | 23,030 | 41% |
| Exports | 11,256 | 11,432 | -2% |
| Sub-Total | 43,805 | 34,462 | 27% |
| TOTAL (2-WH + CV) | |||
| Domestic | 1,90,919 | 1,48,583 | 28% |
| Exports | 1,35,887 | 1,32,931 | 2% |
| TOTAL | 3,26,806 | 2,81,514 | 16% |
| Particulars | Apr-Dec 23 | Apr-Dec 22 | Change (%) |
| 2 Wheelers | |||
| Domestic | 17,03,704 | 13,90,893 | 22% |
| Exports | 11,07,402 | 13,26,541 | -17% |
| Sub-Total | 28,11,106 | 27,17,434 | 3% |
| Commercial vehicles | |||
| Domestic | 3,53,689 | 2,00,701 | 76% |
| Exports | 1,17,562 | 1,49,994 | -22% |
| Sub-Total | 4,71,251 | 3,50,695 | 34% |
| TOTAL (2-WH + CV) | |||
| Domestic | 20,57,393 | 15,91,594 | 29% |
| Exports | 12,24,964 | 14,76,535 | -17% |
| TOTAL | 32,82,357 | 30,68,129 | 7% |
Bajaj Auto’s December sales figures painted a picture of strong domestic demand across both two-wheeler and commercial vehicle segments. Domestic two-wheeler sales jumped 26%, driven by a significant 41% increase in domestic commercial vehicle sales. Overall, domestic sales grew by a commendable 28%, contributing to a total year-on-year sales increase of 16%. While export figures showed a mixed trend, the strong domestic performance indicates Bajaj Auto’s resilience in the face of global challenges.
The domestic business continues to be the key growth engine for Bajaj Auto. Six consecutive quarters of double-digit YoY growth mark an impressive feat, with strong performance across segments, particularly the sustained competitive growth in 125 cc+ motorcycles and the acceleration of three-wheeler sales. Exports are gradually recovering, with volumes up 8% sequentially, despite volatile market conditions.
Bajaj Auto’s focus on premiumization in motorcycles is paying off, with consistent market-leading growth in the 125cc+ segment. The launch of the Pulsar N150, with its aggressive styling and attractive price point, further strengthens the Pulsar family. The three-wheeler segment is also witnessing a promising trajectory, with record-high sales and an encouraging response to the e3W launch. Bajaj Auto is actively expanding its network and product offerings to capitalize on this momentum.
The electric scooter Chetak is making steady progress, doubling its exit market share to 11% compared to the same period last year. Brand activation, network expansion, and supply chain improvements are all in place to further scale up the business and compete effectively in the growing electric two-wheeler market.
Deliveries of the Triumph Speed 400 have met with enthusiastic customer response, exceeding 8,000 units in Q2. The company is rapidly building capacity and plans to launch the Scrambler 400X and start exports in Q3. Expanding the Triumph brand experience to over 100 cities by the year end is also on track, showcasing Bajaj Auto’s commitment to the premium motorcycle segment.
Bajaj Auto boasts a robust balance sheet with surplus funds exceeding Rs 17,326 crores as of September 30th, 2023, after distributing Rs 4,000 crores in dividends during the quarter. The company also generated over Rs 3,600 crores of free cash flow in the first half, 1.6x higher than the same period last year. This strong financial position allows Bajaj Auto to pursue strategic initiatives and navigate market challenges with confidence.
Bajaj Auto is a leading two-wheeler and three-wheeler manufacturer with a significant global presence. With a legacy of over 75 years, the company exports to 79 countries and holds a strong market position in both domestic and international markets. Its commitment to innovation, focus on premiumization, and strategic initiatives position Bajaj Auto for continued success in the evolving automotive landscape.
In summary, Bajaj Auto’s recent milestones, from reaching new stock highs to potential buybacks and robust sales and financial performances, affirm its position as a market leader with a resilient global presence.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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