Bank of America Merrill Lynch reduces the price target limit for Bajaj Auto. The target for the auto makers was cut from Rs 1,480 to Rs 1,340.
The expected regarding the market pressures and the downward trajectory of sales happening in the current fiscal, influenced the bank to take the decision. However, despite the cut, the Bajaj Auto was able to maintain it"s 'underperform" rating stock.
The dip in the March-quarter net profit of the company can be reasoned to the one-time gain and the ongoing pressure from the input cost. As per the BOFA-Merrill expectations, the rise in the input costs, the company is supposed to have a higher margin decline.
This would further imply fewer sales in term of both two wheelers and three wheelers. The increase in the input can be reasoned back to the recent hike in the commodity prices.