Bajaj Auto Shares Jump Over 5% To Reach 52-Week High On Solid Q2 Results; Should You Buy?

The share price of Bajaj Auto Ltd traded over 5% higher to hit a 52-week high on Thursday, as day after the company released its September quarter earnings report.

Bajaj Auto shares were up 5.25% at Rs 5414 per share at 1:04 pm IST. At this price, the company has a market capitalization of 1,53,193.11 crore.

The drastic rise in the share price of Bajaj Auto in today's intraday trade in a way indicates that investors are pleased with the company's Q2 results which reported a 17.51% growth in the automaker's consolidated net profit for the September quarter.

The stock has a 52 Wk High and 52 Wk Low of 5,414.95 and 3,522.00.

On Wednesday, the two-wheeler manufacturer posted a 20% year-on-year (YoY) rise in net profit for the September quarter at Rs 1,836.14 crore compared to Rs 1,530 crore in the year-ago quarter. The company's total revenue from operations rose by 5.6% to Rs 10,777.27 crore, against Rs 10,202.8 crore in the same quarter a year ago.

During this period, the earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at Rs 2,133 crore.

The company said that it has a robust balance sheet with surplus funds at Rs 17,326 crore as of September 30, 2023, after a dividend distribution of Rs 4,000 crore during the quarter.

The Board of Directors at its meeting held on June 27, 2022, approved a proposal to back fully paid-up equity shares of the Company having a face value of Rs 10 each from the existing shareholders ( except promoters, promoter group, and persons in control of the Company) from open market through stock market mechanism (i.e. through National Stock Exchange of India Limited and BSE Limited) at a maximum buyback price not exceeding Rs 4,600 per equity share and maximum buyback size up to 2,500 crores.

In this regard, the Company bought back 6,409,662 equity shares from the stock exchange at a volume-weighted average buyback price of 3,900.31 per share comprising 2.22% of the pre-buyback number of shares of the Company. The buyback resulted in a cash outflow of 2,499.97 crore (excluding transaction cost and tax on buyback).

An amount of 582.39 crore was paid towards a tax on buyback. In accordance with relevant statutory provisions, the Company has created a capital redemption reserve of 6.41 crore, equal to the nominal value of shares bought back, as an appropriation from retained earnings. The Buyback Committee of the Company at its meeting held on 10 October 2022 approved the completion and closure of the buyback.

Should you buy Bajaj Auto stock?

Brokerage firm Prabhudas Lilladher has reduced its rating for the Bajaj Auto stock with a target price of Rs 4,800. The firm has marginally increased its FY24-FY26E EPS estimates by ~1% to factor in higher domestic realization and continued 3W volume strength.

Another brokerage house JM Financial has a buy rating for Bajaj Auto stock with a target price of Rs. 5,450.