The Hindu Business Line : Bajaj Auto, Finserv decline sharply on relisting

Mumbai, May 26 Concerns regarding a slowdown in the vehicle markets and rising fuel prices led to a slump in the share price of Bajaj Auto when it re-listed on Monday, after a gap of two and a half months.

Shares of the country’s second biggest motorcycle maker closed at Rs 604.75, a 32 per cent drop from its opening of Rs 898 on the NSE. On the BSE, the stock closed 36 per cent lower than its opening price of Rs 945.

Following the de-merger of the erstwhile Bajaj Auto Ltd, the manufacturing business was transferred to Bajaj Auto. The insurance, wind power and finance businesses came under Bajaj Finserv Ltd.

The erstwhile Bajaj Auto Ltd is now Bajaj Holdings and Investment Ltd, which contains all the businesses not included in the other two companies.

Investors now have one share each of Bajaj Holdings and Investment Ltd, Bajaj Auto and Bajaj Finserv for each share held in Bajaj Auto Ltd. Bajaj Holding now holds a 30 per cent stake in both these companies.

The financial services company Bajaj FinServ Ltd too had a disappointing comeback. Its shares shed 15 per cent down from opening to close at Rs 509.10 on the NSE. On the BSE, the stock opened at Rs 700 and went on to touch an intra-day high of Rs 999 before closing at Rs 514.65.

Bajaj Holdings and Investments too took a beating on the bourses on Monday.

It closed down 11.17 per cent or Rs 75.25 below its previous day’s close at Rs 598.25.

The BSE Auto index was also down close to two per cent today.

Before delisting the parent company, Bajaj Auto Ltd, was among the 30 Sensex stocks. When it last traded, on March 13, the erstwhile Bajaj Auto Ltd stock was trading at around Rs 2,100.

But when trading closed today the share prices of the three entities added up to Rs 1,717.65.

“There is an overall slowdown in the auto sector due to an increase in raw material prices, which has hit the margins of the vehicle makers. And for the company too there aren’t any positive triggers at least in the near future, which could be the reason for the volatility in the share prices of both Bajaj Auto and Bajaj Finserv,” said an auto analyst with a stock broking firm.

Sales decline

The de-merged Bajaj Auto reported a sales decline in its main segment, motorcycles, all through the fiscal. It also showed a decline of 10 per cent in its three-wheeler sales.

From the day of delisting (March 13, 2008) to the re-listing today, the Sensex posted a gain of 6.45 per cent.

The market capitialisation of the three entities is 5.3 per cent higher than that of the erstwhile Bajaj Auto Ltd as on March 13.

On that date the market capitalisation of the original Bajaj Auto was Rs 21,042 crore, according to BSE data.

As of today, the total market capitalisation of the three companies adds up to Rs 22,159.5 crore.

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