Bajaj Auto slips 3% on flat June sales numbers; sheds 7% in last three days

Shares of Bajaj Auto (BAL) slipped  3 per cent to Rs 3,601 on the BSE in Friday’s trade after the company reported flat sales at 347,004 units in June. The two-three wheelers maker had sold a total of 346,136 units during the same month last year.

The company’s total two-wheeler sales grew 2 per cent year on year (YoY) to 315,948 units, mainly due to a 23 per cent YoY jump in exports at 190,865 units during the month. Domestic two-wheeler sales, however, declined 20 per cent YoY at 125,083 units.

One of the other reasons for weak demand at Bajaj was the fact that it has recently discontinued its CT100. Hence, the cheapest model available today is not from Bajaj Auto but from a competitor. This move has hurt BAL’s sales in the 100cc segment where it earlier sold good numbers in rural regions, said HDFC Securities.

While demand is picking up for motorcycles, Bajaj Auto dealers seem to be amongst the worst hit due to massive supply constraints. Most dealers were getting just about 25-30 per cent of their requirement for 125cc and above models. Given Bajaj Auto has a 53 per cent contribution from the overall mix in this segment, it is the worst hit in the industry, the brokerage said in its auto sector update.

Meanwhile, in the past three days, the stock has declined 7 per cent after Bajaj Auto announced its share buyback worth Rs 2,500 via open market. The company intends to buy back 5.43 million shares, aggregating up to 1.88 per cent of its paid-up share capital at Rs 4,600 per share.

The investors seem to be disappointed as the share buyback is through an open market route and not tender offer. In an open market buyback, the company purchases shares directly from the market at the then prevailing price. Whereas, in case of tender offer, the shareholders get an opportunity to tender their shares at a specified price within the time frame.