Shares of Bajaj Auto hit all-time high; here’s why

After a gap-up opening, shares of Bajaj Auto jumped over 5% to hit an all-time high of Rs 5,076.85 on the domestic bourses. Today, the stock breached the Rs 5,000 mark for the first time.

The company has greatly outperformed the benchmark Auto index and the equity benchmark Nifty50 in the last one year. While, the Nifty Auto index and Nifty50 have climbed nearly 23% and about 13%, respectively, in the last year, the leading automaker has gained nearly 40%.

Following the market buoyancy, the stock of Bajaj Auto rose for the second day in a row and is trading in the green for the seventh time out of the last ten trading sessions.

Reason for the rally

Brokerage firm BoFA Securities has upgraded the recommendation on the shares of Bajaj Auto to ‘buy’ from neutral and raised the target price from Rs 5,100 per share earlier to Rs 5,550, indicating a potential upside of 15% from Thursday’s close.

The rise would be mainly driven by 2Es, exports and electric, which are the main bases for valuation and re-rating, BoFA Securities observed. The three-wheeler segment is also on a high while there is a slow recovery in two-wheeler sales in the domestic market.

Additionally, pent-up demand, attractive offers, new product launches, improved supply chains, and digital transformation were some of the factors that would drive the sales growth of the industry.

Triumph in demand

On the demand for the Triumph bike, Bajaj Auto had more than 20,000 units of bookings, while the dispatches were about 3,000-3,500 units in August 2023. The Pune-based automaker is looking to scale dispatches up to about 5,000 in the coming months.

At the time of writing this article, shares of Bajaj Auto were trading at Rs 5,098, up by 253.20 points or 5.63%.

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.