The Nifty Auto index settled 0.69 per cent lower at 25,092.30 on Friday, June 21, against the domestic benchmark Nifty 50 which closed 0.28 per cent lower at 23,501.01 succumbing to profit booking after hitting all-time highs. However, the frontline indices locked in a third straight week of gains powered by a rally in financials and the return of foreign investors.
The Nifty’s 0.15 per cent rise this four-day week was less than the 0.75 per cent it rose last week and its 3.37 per cent surge the week before. The index traded in a sub-300 point range for the second week in a row. The small- and mid-caps were muted on the day, but also rose for a third straight week.
‘’Nifty has been struggling to maintain levels above 23,600, although it remains steady above the support zone indicated by moving averages. We recommend focusing on selective stock picking during this period and using it as an opportunity to accumulate high-quality stocks. Besides domestic factors, global market performance will also be closely watched in the absence of any major events,” said Ajit Mishra – SVP, Research, Religare Broking Ltd.
1.Tata Motors vs Bajaj Auto: Share Price Trend
On Friday, shares of Tata Motors opened at ₹979.90 and hit an intra day high of ₹981.00 against a 52-week high mark of ₹1,065.60 on the BSE. Shares of Tata Motors settled 1.74 per cent lower at ₹961.05 apiece on the BSE. In the last one year.
Shares of Bajaj Auto opened at ₹9,685 and hit an intra day high of ₹9,725 against a 52-week high mark of ₹10,037.30 on the BSE. Shares of Bajaj Auto settled 0.59 per cent lower at ₹9,575 apiece on the BSE. Bajaj Auto has given multibagger returns to investors in the last one-to-three year time periods.
According to Trendlyne data, Bajaj Auto has given 8.95 per cent returns in the last one month, 11.19 per cent in the last three months, 50.87 per cent in the last six months, and 105.97 per cent returns in the last one year. In the last three years, Bajaj Auto has given 130.43 per cent returns to investors.
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2.Tata Motors vs Bajaj Auto: Technical Analysis
Bajaj Auto launched E-3W in Q3FY24 in certain markets, where it has become one of the leading players aided by its strong brand value. E-3W profitability is on par with ICE powertrain, while the path towards profitability for e-scooters will be gradual. The management aims to gradually scale up the production of Triumph to ~10,000 units/month (currently at ~6,000 units/month).
Domestic brokerage firm Prabhudas Lilladher foresees healthy demand for Bajaj Auto from rural and urban markets, driven by new launches across categories and a strong presence in the 125+cc space. Swarnendu Bhushan, Co. Head of Research, Prabhudas Lilladher Pvt. Ltd, has upgraded the stock’s rating from ‘sell’ to ‘hold’.
‘’Given the high growth rate in e-scooters/3W, market share expansion and consistent mix improvement, we change our rating from ‘Sell’ to ‘Hold’ and revise our target price upwards to ₹9,984 valuing the company at 27x (20x earlier), factoring in the high growth rate in the EV and premium segments,” said Bhushan of Prabhudas.
On Tata Motors, domestic brokerage Elara Securities believes that the auto major’s British luxury arm Jaguar Land Rover or JLR’s long-term target of 15 per cent EBIT margin is aggressive and depends on how its EV products are accepted, especially when EV profitability for global peers has been cause for concern.
Despite JLR’s market share in the global premium segment declining from 6.1 per cent in CY20 to 5.4 per cent in CY23, its revenue share increased from eight per cent to 10 per cent, driven by a richer product mix.
‘’We reiterate ‘Accumulate’ with a target price of INR 1,100 based on a SOTP method. We value JLR at 2.5x FY26E adj EV/EBITDA, implying 8.0x target P/E, which is at a premium to BMW and Mercedes, but at a 30 per cent discount to Porsche. While Porsche has a higher EBIT margin of 17.7 per cent as on CY23, its ROCE is similar to JLR at 20-25 per cent,” said Elara Securities.
3.Tata Motors vs Bajaj Auto: Outlook
Bajaj Auto looks to sustain momentum in its domestic business and expand production capacity for new businesses as it expects demand to remain robust in the current fiscal, according to Niraj Bajaj, Chairman, Bajaj Auto. “It is anticipated that India, now the fastest growing economy in the world, will achieve upwards of 7 per cent real GDP growth in FY2024, and various forecasts expect this buoyancy to continue in FY2025,” said Bajaj.
Besides, the Pune-based firm looks to “navigate the challenging international landscape and stay the course on recovering our export volumes,” said Bajaj. Bajaj Auto also plans to expand capacity, capabilities and network for its new businesses – Chetak electric scooters, electric three-wheelers and Triumph motorcycles.
Tata Motors remains cautiously optimistic about the near-term outlook for domestic demand over the full year and expects H1 to be relatively weaker. ‘’The premium luxury segment demand is likely to remain resilient despite emerging concerns on overall demand. Despite this, we are confident of delivering a strong performance in FY25,” said Tata Motors in its regulatory filing to the stock exchanges on May 10.
4.Tata Motors vs Bajaj Auto: P&L print, revenue
Tata Motor’s total revenue from operations in the fourth quarter of FY24 rose 14.3 per cent to ₹1.2 lakh crore, compared to ₹1.05 lakh crore in the year-ago period. Britain-based JLR, known for the Ranger Rover and top-selling Defender SUVs, is key to Tata Motors’ quarterly results, comprising two-thirds of its consolidated revenue.
JLR reported “another record-breaking quarter” in Q4 FY24. JLR’s net profit in the March quarter was £1.4 billion pounds compared to £259 million in the year-ago period. JLR’s revenues for FY24 were £29 billion, its highest-ever full-year revenue and up 27 per cent compared to FY23, while net profit for FY24 stood at £2.6 billion.
Bajaj Auto reported a rise of 18 per cent in consolidated net profit at ₹2,011.43 crore in the January-March quarter of FY24. Bajaj Auto is the first among its two-wheeler maker peers to report its March-quarter results. The company’s earnings in the quarter-under-review was led by strong domestic demand for its motorcycles and a recovery in exports of the two-wheeler segment.
The auto major posted revenue of ₹11,249.8 crore for the January-March quarter up by 30 per cent from ₹8,660 crore during the same period last year.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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Published: 21 Jun 2024, 08:51 PM IST