Bajaj Auto in red as Chakan workers go on strike

MUMBAI: Shares of two-wheeler major Bajaj Auto opened in the red as sentiment turned bearish after workers at its Chakan plant went on strike.

At 09:25 a.m.; the stock was at Rs 1,768.75, down 1.73 per cent, on the BSE. It touched a high of Rs 1,780.10 and a low of Rs 1,764 in trade today.

The Company has received a notice from the workmen's union of its Chakan plant viz., Vishwa Kalyan Kamgar Sanghatana stating that they propose to call for a stoppage of work by all the workmen employed in Chakan plant from the morning shift of June 28, 2013.

However, the workmen have stopped coming to the Chakan plant from June 25, 2013.

The management had refused to concede their demand that all the workmen working in Bajaj Auto should each be given an option to subscribe to 500 equity shares of the company at a discounted price of Re 1 per share.

“We do not see any immediate impact of the strike on the company’s sales given that it has an inventory of around 5-6 weeks in the system. At Rs 1,800, the stock is trading at 13.1x FY2015E earnings. We maintain our 'Accumulate' rating on the stock with a target price of Rs 2,056,” said Angel Broking note.

Meanwhile, Mitesh Thacker of miteshthacker.com has recommended to go short on Bajaj Auto at Rs 1,770 with a stop loss of Rs 1,796 for a target of Rs 1,725.