Bajaj Auto among top picks in two-wheelers; ripe for re-rating: Abhishek Gaoshinde

economictimes.indiatimes.com:

Abhishek Gaoshinde, Deputy V-P, Research, Sharekhan By BNP Paribas, says “Bajaj Auto has been consistently maintaining its EBITDA margin above 15% for the last seven-eight quarters and above 19% for the last two-three quarters. After maintenance of this kind of margin, improvement in its product portfolio and filling in the gap in its overall portfolio, we believe the stock demands a re-rating and we have a buy rating on the stock.”What happened to Bajaj Auto this time?On the top line side, the numbers were broadly in line with our expectations. We were expecting roughly Rs 10,500 crore kind of a number and it is just a Rs 200 crore miss.

The bottom line also is close to our estimates. This quarter was a very peculiar quarter. The export mix was weak and a larger part of the performance was driven by the domestic volumes only.

Despite that, if a company maintains this kind of a performance, then I think it is seeing a change in the overall flavour of the company. So, the performance is now not only dependent on the export volumes, but premiumisation of the domestic market is also helping the company maintain the margin run rate.At Rs 4,700-4,800 valuation, what is your call on the stock?Bajaj Auto historically is a mass premium motorcycle market in the domestic and the export market. Things have been continuously changing for Bajaj Auto.

It has added 400 in its portfolio and going forward it will participate in the growth journey of the iconic premium motorcycle segment where currently Royal Enfield is the market leader. Initially we need to check what kind of dealership expansion would be there because currently it has only 15-16 dealers in this prime segment. But as the dealership expands from 15-16 to 70-80-100, then