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Published on 15/11/2018 10:42:10 AM | Source: Reliance Securities Ltd

Buy Bajaj Auto Ltd For Target Rs.3,015.00 - Reliance Sec

Posted in Broking Firm Views - Short Term Report| #Bajaj Auto Ltd #Auto Sector #Trading Report #Reliance Securities Ltd

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*  Bajaj Auto (BAL) closed 2% up as against Nifty rising by 1.7% yesterday.

*  BAL’s strategy of focusing overseas markets coupled with higher crude price would result in strong export volume. Management expects exports to grow by ~15% CAGR over next 5 years, while we expect its exports to grow >20% YoY over FY18-FY19E.

*  Moreover, favourable exchange rate would take care of higher commodity cost. Envisaging a strong bounce back in export volume coupled with INR depreciation, we expect BAL to record an EPS of Rs179 in FY20E.

*  Post sharp correction, currently stock is trading at 14X FY20E EPS, which appears attractive in valuation.

*  In view of ~22% RoE, healthy margin profile and positive export outlook, we recommend BUY on BAL with a Target Price of Rs3,015, valuing the stock at 16x FY20E EPS and adding Rs150/ share for BAL’s stake in KTM.


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