Buy Bajaj Auto on dips: Deven Choksey

Deven Choksey, MD, KR Choksey Securities in an interview with ET Now talks about Bajaj Auto and Hero Honda.

What is the call on Hero Honda?

On the fundamental side of the volumes, I would not have too much of a doubt. In fact, they would be the last ones to get affected in the rising interest rate scenario because there as we see it, the maximum amount of buying of 2 wheelers on credit is 20% to 30%. Beyond that, everything is on a self funding. So to an extent, it should not affect 2 wheeler segment more.

The problem with Hero Honda is that and this is going to be a period in which Hero Honda will have to adjust itself because they are separating out from Honda. So to a greater extent in this adjustment period, sacrifice would be on the margin front in whichever form you want to look at it and that is where vis-à-vis Bajaj Auto, Hero Honda margins would be substantially on the lower side which got validated in the last quarterly results also.

Between the two if you have to select one, it should be Bajaj Auto because it promises 2 things, one it has the one third of business as exports.

So it is fundamentally a balanced portfolio and the second thing about Bajaj Auto is that it has basically committed onto the higher amount of EBITDA margins. If they end up sustaining that part of it, volumes plus margins would be covered in Bajaj Auto. Any market fall or sentiment related fall in the market could possibly throw open the opportunity to buy Bajaj Auto at lower levels. So eye and focus should be onto the Bajaj Auto.