Brokerage firm JPMorgan expects a potential upside of 41 percent in the bull case scenario for two-wheeler manufacturer Bajaj Auto. Its base case projects a potential upside of 16 percent to Rs 4,400.

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While JPMorgan has an overweight rating on Bajaj Auto, it has also highlighted a bear case scenario, where share prices are projected to fall 12 percent.

On March 8, JPMorgan had issued a note on Bajaj Auto and highlighted four factors why the stock can re-rate going forward.

The brokerage in a note stated that it expects a recovery in the stock as a decline in exports is likely to have bottomed out and there could be a potential recovery from the second quarter of the next fiscal.

JP Morgan also expects a recovery in the domestic two-wheeler market as sales volumes are still down by 21 percent from the pre-Covid levels.

A ramp up in volume for electric two-wheelers and three-wheelers as well as improving margins due to better overall mix would also drive the valuations of the company higher.

Recent conversations with investors have indicated concerns around timing of these catalysts, especially exports recovery, the brokerage noted.

Bajaj Auto this month launched an upgraded version of electric scooter, Chetak Premium 2023 Edition, at a price of Rs 1.52 lakh (ex-showroom, Bengaluru).

Bajaj Auto has also opened bookings for the new scooter, promising to deliver it from next month.

Bajaj Auto also recently tied up with Yulu, a shared electric mobility startup, to deploy 1,00,000 vehicles across major cities in the country. The new electric vehicles are expected to deliver more than 10x revenue growth by the end of the year.

Total wholesales of Bajaj Auto declined by 11 per cent year-on-year to 2,80,226 units in February. Exports declined 38 per cent to 1,26,935 units in February 2023 against 2,03,273 units in February 2022.

Shares of Bajaj Auto are trading 0.9 percent higher at Rs 3,826.9. The stock is up 7 percent so far this year.

Also Read: Bajaj Auto says it has entered the 'scale-up' phase in its EV journey as it aims to produce 10,000 Chetaks a month

(Edited by : Rukmani Krishna)

First Published:Mar 29, 2023 12:07 PM IST