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Centrum Broking
CMP: ₹3,118
Target: ₹3,733
Bajaj Auto Ltd, launched Chetak, its e-scooter on January 14, 2020, at an attractive price point of ₹1,00,000-1,15,000. It is the first launch by a mainstream two-wheeler OEM (original equipment manufacturer) and could drive adoption of e-scooters in a big way. Adoption of electric two-wheelers is easier than a PV as two-wheelers would have issues such as lack of charging infrastructure or range as two-wheelers have limited daily driving requirement. Low quality products in the market, low speed and range are the major concerns that need to be addressed to push e-scooters.
Bajaj Auto’s Chetak could address these issues and change the mind set of consumers towards e-scooters. With a mainstream two-wheeler such as Bajaj Auto in the market, battery life, range deterioration and battery resale value should improve.
We maintain ‘buy’ and target price of ₹3,733 (18x FY21E Core EPS + cash per share (proportionate share of stake in KTM) + 40 per cent holding company discount.
Key risks: Intensifying competition in the domestic two-wheeler market could impact market share and profitability. Any disruption in key African market could affect exports numbers.
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