On July 05, Bajaj Auto Limited (BAL) launched Triumph Speed 400 and Triumph Scrambler 400X in association with British bike maker Triumph in India after unveiling them on a global stage in London.
This expansion into the realm of iconic premium motorcycles showcases Bajaj Auto's intent to extend its dominance beyond the mass premium motorcycle segment.
Triumph Speed and Triumph Scrambler 400x are the first co-produced products by Triumph Motorcycles and BAL. Triumph would care of brand, design, and product, BAL would focus on development, co-design, engineering, sourcing, and manufacturing. Triumph 400 cc, which would be manufactured in India, would also be exported to overseas markets.
The Triumph Speed 400 is priced at an attractive price tag of ₹2.33 lakh, and the newly launched Speed 400 cc would be offered at ₹2.23 lakh to the first 10,000 customers.
Given that Triumph has been a combination of classic iconic style and modern technology, the affordable-priced Triumph would attract a new set of aspirational customers for BAL, given currently Triumph in India is available in a price band of ₹8 lakhs to ₹20 lakhs, said the brokerage firm Sharekhan.
The brokerage notes that affordable products from aspirational brands tend to gain favouritism from customers, citing the case of Royal Enfield's Hunter 350cc motorcycle.
The brokerage further believes that BAL has been plugging the gaps in its portfolio and is playing with a bunch of brand portfolios in multiple segments.
A focused approach to an individual motorcycle segment via a specific brand has been helping BAL in gaining space in the premium motorcycle segment with a healthy profitability, it noted.
Given Bajaj Auto's consistent focus on profitability and its brand-focused play in the premium segment, the brokerage has raised its target price on the stock to ₹5,600 apiece, maintaining a 'buy' recommendation.
This new revised target price indicates an all-time high for the stock and has an upside potential of 14.3% from its previous closing price. Meanwhile, the stock has been doing well on exchanges, as it has delivered a return of nearly 21% in the last three months and in the previous trading session the stock marked a new life time high of ₹4,951 apiece.
In the current year so far, the stock has outperformed the Nifty Auto index with a rally of 35.45%, while the Nifty Auto Index has gained 22% in the same time period.
In June 2023, the company reported a 33% YoY increase in domestic 2-wheeler sales, reaching 1,66,292 units. However, exports declined by 33% during the same period, resulting in a total sale of 2,93,649 units, which is a 7% YoY fall.
For commercial vehicles, there was a significant 52% growth in sales, with 47,332 units sold. This growth was primarily driven by a substantial rise in domestic sales, which increased by 154% to 33,691 units compared to 13,268 units the previous year. On the other hand, commercial vehicle exports fell by 23% to 13,641 units from 17,789 units in June 2022.
Overall, total vehicle sales (including 2-wheelers and commercial vehicles) slightly decreased to 3,40,981 units in June, compared to 3,47,004 units recorded in the same period last year.
According to the company's latest annual report, domestic sales of its electric scooter Chetak grew over four-fold to 36,260 units in FY23. In FY22, Chetak electric scooter clocked sales of 8,187 units. The iconic brand Chetak was re-introduced in the market as an electric scooter in FY2021.
Meanwhile, for the fourth quarter ending March 31, 2023, the company saw a marginal drop in its standalone net profit to ₹1,433 crore. In the same quarter last year, the company recorded a net profit of ₹1,469 crore.
However, for the full fiscal year 2022–23, standalone PAT increased by 12% to ₹5,627.60 crore compared to ₹5,018.87 crore in FY22.
42 analysts polled by MintGenie on average have a 'hold' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.