Buy Bajaj Auto, target price Rs 4420: Emkay Global

Emkay Global has buy call on Bajaj Auto with a target price of Rs 4420. The current market price of Bajaj Auto Ltd. is Rs 3856.5 Time period given by analyst is one year when Bajaj Auto Ltd. price can reach defined target.

Bajaj Auto Ltd., incorporated in the year 2007, is a Large Cap company (having a market cap of Rs 111526.39 Crore) operating in Auto sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 7715.34 Crore, down -13.11 % from last quarter Total Income of Rs 8879.70 Crore and up 125.78 % from last year same quarter Total Income of Rs 3417.12 Crore. Company reported net profit after tax of Rs 1059.21 Crore in latest quarter.


Investment Rationale
The brokerage reaffirms Buy with SOTP-based TP of Rs4,420 (Rs4,340 earlier), based on 18x P/E on Sep’23E (earlier Mar’23E). The target multiple implies a core P/E of 18x and cash/share of Rs722. KTM is valued at Rs140/share based on a 12x P/E and a 20% holding company discount. Key downside risks are lower-than-expected demand in key geographies, increase in competitive intensity and adverse currency/commodity prices.

Promoter/FII Holdings
Promoters held 53.7 per cent stake in the company as of June 30, 2021, while FIIs held 11.8 per cent, DIIs 12.7 per cent and public and other 21.8 per cent.