Bajaj Auto Reverses Losses Even As Share Buyback Is Deferred
Bajaj Auto's decision to defer its share buyback has prompted UBS to lower its sales forecast and cut its target for the firm.
Shares of Bajaj Auto Ltd. fell after the company deferred decision on its buyback saying further deliberations are required. The stock, however, pared all losses at closing of the trade.
The move to defer the buyback prompted UBS to lower its domestic growth and export assumptions for the Pune-based automaker. The research firm also cut its price target on the stock.
The stock was volatile in Wednesday's session. It fell 1% intraday trade before reversing all losses to close 0.4% up.
Shares of Bajaj Auto ended 5% lower on Tuesday after the company announced the decision to defer the buyback.
On Tuesday, the company also said Shekhar Bajaj has tendered his resignation as non-executive director of the company with effect from June 30.
Bajaj Auto has announced a dividend of Rs 140, payable on July 30. The stock will trade ex-dividend on June 30.
Of the 53 analysts tracking the company, 39 maintain 'buy', 10 suggest 'hold' and four recommend 'sell', according to Bloomberg. The average of 12-month analyst price targets imply a return potential of 13.8%.
Here's UBS view on the company's deferral of buyback proposal.
UBS
Maintains 'neutral' on the stock with the price target reduced to Rs 3,800 from Rs 4,000, still an implied upside of 3.21%.
Uses deferral in considering buyback proposal as an opportunity to lower volume assumption for Bajaj Auto to account for weak numbers in April and May 2022.
Cuts FY23 export volume growth assumption for 2-Wheelers to 5% (from 8% earlier) and -15% (from -5% earlier)
Reduces FY23 domestic two-Wwheeler growth forecast to 14% (from 16%) due to low inventories.