Positive on Bajaj Auto: Rajesh Jain

Rajesh Jain, Market Strategist in an interview with ET Now talks about Bajaj Auto.

What are your views on Bajaj Auto?

Bajaj Auto is choosing to get out of the joint venture with Renault and shedding the proprietary stake in this small care venture. Renault has not had a very good debut in the Indian automobile market through its product Logan which has had a very lukewarm response. Bajaj is being attacked in its home through the two-wheeler segment. Hero Honda really ran away with the race last year.

The numbers have been very good. The company could benefit with some margin expansion in the last quarter. I think it needs to consolidate its strength in the two-wheeler segments before really diluting it trying to chase the small car Nano.

Bajaj also has the option of doing contract manufacturing for Renault and that’s a good option to use because Bajaj has the land and manufacturing ability and the know-how. So I think today’s decision really enhances all the other positives that Bajaj has been witnessing in its two-wheeler business that a volume growth and possible margin expansion, and I personally believe that a 3000 ticker should happen within the year. I am therefore positive for Bajaj Auto more so because of the decision to move out of the branding cost and the marketing cost of creating a small car brand at a time when Nano has yet to prove itself.