Bajaj Auto sells 275,868 units in May 2022; stock dips 4% on profit booking

With schools/colleges opening in June 2022, there will be improvements in the footfalls in dealerships, according to analysts.

Shares of Bajaj Auto dipped 4 per cent to Rs 3,709 on the BSE in Wednesday's trade on profit booking after the company reported flat (total) sales for the month of May at 275,868 units. The two/three wheelers company had sold 271,862 units in May 2021. In comparison, the S&P BSE Sensex was down 0.75 per cent at 55,151 units at 02:57 PM.

For the first two months (April & May) of the current financial year 2022-23, total sales were down 11 per cent year-on-year at 586,642 units as against 659,878 units during the same period last fiscal. CHECK DETAILED REPORT HERE

On the bourses, Bajaj Auto has outperformed the market, in the past three months, by gaining 5 per cent as compared to 2 per cent decline in the S&P BSE Sensex. Moreover, in six months, the stock has rallied 14 per cent, as against 4.4 per cent fall in the benchmark index. That said, in one year, Bajaj Auto has seen its market price decline by 12 per cent, as compared to a 6 per cent gain in the Sensex.

According to Motilal Oswal Financial Services, reduction in fuel prices has failed to cheer the retail demand so far. "Improvement in cash flows in rural economy due to Rabi harvesting is supporting the demand revival. With schools/colleges opening in June 2022, there will be improvements in the footfalls in dealerships," the brokerage said in a sector update.

Premium motorcycles above 150cc are facing chip shortage issues, leading to a waiting period of nearly 15 days. Inventory in the system has normalized to 30-45 days (v/s average of 40-60 days during the last few months). Given this, the brokerage firm expects wholesale for Bajaj Auto 2Ws to grow around 20 per cent YoY.

Bajaj Auto is focusing on the electric vehicle (EV) space and has planned a slew of launches in 2Ws/3Ws across various use-cases over the next 2-3 years. In June 2022, Bajaj Atuo plans to launch an E3W and commission an E-2W plant with an annual capacity of 500,000 units.

"The management expects strong growth in 2Ws volumes, with a focus on profitable categories. It is seeing strong demand due to the marriage season in Q1FY23. Rural demand is improving on better sentiments. The rural share stands at around 45 per cent. Student demand could see a recovery this year. The pre-Covid share for this segment was at around 20 per cent," analysts at Emkay Global Financial Services said in a note.