Car News

Bajaj Auto sales have dropped on M-o-M basis. In an interview on CNBC,
Rajiv Bajaj, MD, Bajaj Auto stating that it was expected post diwali
and dussera and rising interest rate and petrol rise is the reason in
slowdown in sales. But if you compare Bajaj auto with its competitors
like Honda, Hero Moto corp, Yamaha and Suzuki whose sales have
increased tremendously on m-o-m and as well as the y-o-y basis in the
same period. I think with the introduction of new variant like CBR150
by Honda, Impulse by Hero MotoCorp and R15 by Yamaha will have an
adverse effect on the Bajaj premium bikes. Honda has increased its
production capacity due to Alwar plant and its further increasing its
capacity to 3.5 lacs due to setting up a karnatak plant by Oct 2012.
With decrease in waiting period of Honda's unicorn and Shine will give
a stiff competition to discover and pulsar. It is on the verge of
launching a new cheapest 110cc bike ever worth Rs.27, 700 in Indian
domestic market by Jan, 2012. This will have a direct impact leading
to a price war within the two-wheeler bikes in this segment. On an
export front, Bajaj auto is getting hit by Hero MotoCorp, as it is
setting up a 100% export plant in Sanand Gujarat and Honda, through
its China plant has introduced its new variant Honda Ace125cc (pricing
31,000 INR) in Nigerian and South African market. Hero MotoCorp on the
other hand, has initiated its distribution network in all the 11
countries where Bajaj is exporting. In three-wheeler segment Hero
MotoCorp is coming in a very big way and Piaggio is increasing its
capacity by 40%. Emkay and Religare are recommending buy on Bajaj as
they are eager to sell off their acquire stock. According to the
sources, LIC and Jamshed Dadabhoy, Citi group auto sector analyst have
also recommended a sell on Bajaj Auto. Within a year 19 new models is
going to launch in this segment having an adverse effect on the old
model of bajaj.
In the current market the most preferred brand of two-wheelers is
Honda which will replace Bajaj's 2nd position by December 2011 & by
March -12, Bajaj will downgrade to 4th position giving its way to TVS
in Indian market.
Considering all this factor, Bajaj auto stock price will be soon 900.
So SELL BAJAJ AUTO at the current price.

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