News of Bajaj Auto’s new Ev production line fails to keep stocks in the green


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To buy to sell Bajaj Auto to share

Bajaj Auto shares rose in early trade on Friday but were back in the red ahead of the launch of the two-wheeler maker’s new electric vehicle production line scheduled for later in the day. On Thursday, the company also announced that its board would consider a stock buyback next week.

Shares of the company gained 2.2% in early trading but quickly fell 2.7% from that level to hit the day’s low of 3,857 rupees. As of 11:18 a.m., the stock was trading down 0.4% at Rs 3,860.50 on BSE.

News of Bajaj Auto's new Ev production line fails to keep stocks in the green

The downward trend in shares of two-wheeler manufacturers comes as inflation fears grip investors around the world. US inflation data later in the day should further affect global markets.

Bajaj Auto’s board of directors will meet on June 14 to consider the first-ever buyback of its shares. Repurchasing shares is considered a tax-efficient way to reward shareholders. In a regulatory filing on Thursday, the company said the board would consider a proposal to buy back fully paid shares in accordance with the Securities and Exchange Board of India (Redemption of Securities) Rules 2018.
The filing also stated that the trading window for trading Bajaj Auto securities was closed from June 9 to June 16 (both days inclusive) in accordance with SEBI (Prohibition of Insider Trading) 2015 standards.

Bajaj Auto has $750 million of cash on its books as its capital expenditure needs remain low. Its FY22 capital expenditure was $75 million.

Global brokerage Morgan Stanley has an equal weight rating on the stock with a target price of Rs 4,182 per share.

“Looking at previous takeovers such as Tata Consultancy Services (TCS) and agrochemical company UPL, the offer price was more than 15% above the market price. Assuming a similar trend, we believe Bajaj’s share price could rise in the near term,” the brokerage said.

Bajaj Auto is launching a new electric vehicle production line at its plant in Akurdi, Maharashtra, on Friday. In November 2021, the company announced that it would invest Rs 300 crore in a new EV unit to increase production of Chetak and future EV products to 500,000 per year.

Chetak EV will be produced at the factory where the Chetak IC scooter was manufactured until 2005. Bajaj Auto has an order book of approximately 16,000 Chetak EVs due to shortage of supply. The new electric vehicle factory will initially have a capacity of 400 units per day. Meanwhile, the production of electric vehicles will continue simultaneously in Chakan for some time.


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