Bajaj Auto, Maruti Suzuki share prices jump up to 8% on upbeat September auto sales number

Auto stocks such as Bajaj Auto and Maruti Suzuki shares soared up to 8 per cent after the automobile companies released better-than-expected September auto sales number. Bajaj Auto shares surged 8 per cent to Rs 3,111.75 apiece while Maruti Suzuki shares managed to gain 2.4 per cent to trade at day’s high of Rs 6,906.60 apiece. In comparison, S&P BSE Sensex was up 1.41 per cent or 535 points at 38,603.05. The sales of Maruti Suzuki India jumped 30.8 per cent on-year to 1,60,442 units in September 2020. On the other hand, overall sales of Bajaj Auto increased 10 per cent on-year to 4,41,306 units in September 2020. “Maruti Suzuki reported better than expected sales numbers for the month of September 2020. Domestic sales growth was driven by the entry-level mini and compact segments which reported growth of by 35.7% YoY and 47.3% YoY respectively on the back of increased preference for personalized transportation post Covid-19,” said Jyoti Roy, DVP- Equity Strategist at Angel Broking Ltd.

The total sales of Maruti Suzuki include domestic sales of 1.5 lakh units and 2,568 units for other OEMs. The company also exported 7,834 units last month. With total sales of 3.93 lakh units in Q2 (FY2020-21) the company registered a growth of 16.2 per cent over the same period the previous year, on a lower base. While the company closed H1 i.e. April-September (FY2020-21) with total sales of 4.69 lakh units a decline of 36.6 per cent over H1 April-September (FY2019-20).

The domestic sales, including two-wheelers and three-wheelers of Bajaj Auto, rose 6 per cent to 2.28 lakh units, exports increased 14 per cent to 2.12 lakh units. According to an exchange filing, this was the highest ever exports by the company. “We expect the domestic two-wheeler segment will continue to do well in October also due to pent up demand and inventory push prior to the festive season while exports are also to stabilize as supply chains have normalized. In the commercial vehicles space while exports have normalized domestic sales are expected to improve only gradually as restrictions are eased in India,” Jyoti Roy added.

According to the analysts at Motilal Oswal Financial Services, the upcoming festive season is expected to be very good, the sustenance of demand post the festive season is the key parameter to monitor. Valuations reflecting recovery from 2HFY21, leaving limited margin for safety for any negative surprises. “We prefer companies with higher visibility in terms of demand recovery, a strong competitive positioning, margin drivers, and balance sheet strength,” it added.