Financial Daily from THE HINDU group of publications
Saturday, Mar 11, 2006
Financial Daily from THE HINDU group of publications Saturday, Mar 11, 2006 |
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Markets
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Stocks Bajaj Auto surges on hopes of demand growth Veena Venugopal
Big buzzer The scrip has had a strong run over the last 30 days and has logged in 25 per cent return during this time.
Mumbai , March 10 Bajaj Auto had a field day at the bourses today with announcements that the company is going to enhance capacity in order to meet growing demand for its two and three-wheelers. The scrip has been a big buzzer on the bourses all month as brokerages have also published `buy' reports with target prices of over Rs 3,300 . The scrip gained over Rs 86 today to close at Rs 2,753.50. It touched its 52-week high of Rs 2,808.90 on March 2. It has had a strong run over the last 30 days and has logged in 25 per cent return during this time. Bajaj Autos' counter has been buoyed by expectations of demand growth. This was given a further fillip when an IL&FS Investsmart Research report suggested a target price of Rs 3,325.
Revises volumes target
The company announced today that it had upwardly revised its volume targets for the year ending March 2007. The company expects to sell 28.5 lakh during FY07. This is broken up as 25.5 lakh two-wheelers and 3 lakh three-wheelers. The board of Bajaj Auto has approved a capacity expansion plan to cope up with this increased demand. The company now plans to build capacity of 2 and 3-wheelers to 51 lakh vehicles per annum by 2009. Of this, 46 lakhs would be in the two-wheeler segment, the company announced. The first phase of this is an expansion of motorcycle capacity to 36 lakh per annum by 2007.
Expand R&D
The company would also be seeking to expand its research and development capabilities. Pro-biking, the retail chain of high-end bikes, would also be developed, the company said. Analysts say the fact that the expansion costs are being funded internally is a reflection of the company's cash rich status. They opine that the launch of new models in the two-wheeler and three-wheeler segments would help the company stay in its high growth trajectory. Raw material costs for the company is reducing and this added with duty cut for aluminium that was announced in the Union Budget 2006 is expected to help Bajaj Auto improve its margins. There was also speculation that company might announce a stock split. Brokers say that this was also one of the reasons for the bullishness in the stock. However, post Friday's board meeting, there were no announcements regarding a stock split.
More Stories on : Stocks | Two/Three Wheelers | Bajaj Auto Ltd
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