Bajaj Auto inventory plummets to 4-month low, slides 29% from latest peak. Can it fall extra?

Shares of Bajaj Auto, one of many main producers of two-wheelers, fell almost 2% in commerce on Thursday, November 28 to hit a 4-month low of ₹9,013 per share. In intra-day commerce, the inventory briefly gave up the ₹9,000 degree to commerce at ₹8,992 apiece. The inventory has been on a downward development because it reached an all-time excessive of ₹12,774 per share in late September, marking a 29.5% correction from that peak.

The sell-off started after the corporate reported disappointing monetary efficiency for the September quarter, which prompted analysts to decrease their goal costs.

Moreover, elevated competitors within the 2W electrical car phase has raised considerations amongst buyers, particularly at a time when the corporate is aiming for the second place within the E2W area and increasing its attain whereas planning to launch new fashions.

Additional contributing to the unfavorable sentiment, Bajaj Auto reported weak home gross sales for October, with a year-on-year decline of 8%, dropping from 3.29 lakh items to three.03 lakh items. Nonetheless, the corporate noticed a rise in its month-to-month exports, which helped offset the home gross sales dip, leading to a close to 2% development in complete gross sales to 4.79 lakh items in October.

Regardless of the expansion, complete gross sales nonetheless fell wanting avenue expectations. In distinction, friends like TVS Motor, Hero MotoCorp, and Eicher Motors posted important development of their month-to-month home gross sales, starting from 17% to 26%.

The corporate’s market share within the two-wheeler (2W) phase additionally dropped to 11.15% in October, down from 11.84% in response to FADA knowledge. Hero MotoCorp maintained the highest spot with a market share of 27.92%, adopted by Honda at 26.84% and TVS Motor at 17.04%, the info confirmed.

Bajaj Auto m-cap tumbles by ₹1.19 lakh cr

In October, Bajaj Auto’s inventory confronted its worst month-to-month drop since March 2020, plunging 20.33% after the corporate warned of weak festive gross sales. The downward development continued into November, with the inventory declining by an extra 8.36%.

This important correction within the inventory worth has led to a pointy erosion within the firm’s market capitalization, which has fallen from ₹3.71 lakh crore to ₹2.52 lakh crore, leading to a lack of ₹1.19 lakh crore.

For the quarter ended September 30, 2024, Bajaj Auto reported a 31% year-on-year decline in its consolidated revenue after tax, which fell to ₹1,385 crore. This was primarily as a consequence of greater bills and a one-time hit from elevated provisions for deferred tax.

Whereas the corporate’s complete income from operations rose to ₹13,247 crore for the second quarter, in comparison with ₹10,838 crore in the identical interval final 12 months, Bajaj Auto revised its development outlook for two-wheeler gross sales in India, decreasing its forecast to a modest 5%, on the decrease finish of its earlier estimate of 5-8%.

Tech View: Can Bajaj Auto inventory fall extra?

Rajesh Palviya, SVP, Technical and Derivatives Analysis, Axis Securities, stated, “The inventory is trending decrease, forming a sequence of decrease tops and bottoms representing a short- to medium-term downtrend. The inventory can be sustaining beneath its 20, 50, 100, and 200-day SMA’s, which reconfirms a bearish outlook within the upcoming weeks. Just lately, the inventory has violated its a number of help of 9320 ranges on a closing foundation, which indicators the bear’s rising grip.”

“The power indicator RSI is in unfavorable terrain throughout on a regular basis frames, which reveals a lack of power. The short- to medium-term outlook stays weak with an anticipated draw back of 8500–8000 ranges. Alternatively, the essential provide zones are positioned round 10000-10500 ranges, and any small aid rally in direction of the talked about provide zone could stay as an exit alternative for merchants,” he added.

Rajesh Bhosale, Fairness Technical and Spinoff Analyst at Angel One, stated, “Bajaj Auto has witnessed a major sell-off over the previous couple of months, erasing greater than 30% from its peak. Whereas such corrections typically appeal to long-term buyers, the inventory has but to point out any clear indicators of reversal regardless of being within the oversold zone.”

“The subsequent important help lies at 8750, a degree that beforehand triggered a rally in July, propelling the inventory to its all-time excessive of 12774. If the value revisits this help, it might current a staggered shopping for alternative for merchants,” he famous. 

Disclaimer: The views and proposals given on this article are these of particular person analysts. These don’t signify the views of Mint. We advise buyers to verify with licensed specialists earlier than taking any funding selections.