Bajaj Auto Q2 Preview: Revenue Growth Driven by Strong Volumes

Introduction Bajaj Auto Limited, headquartered in Pune, is scheduled to announce its earnings for the second fiscal quarter of FY25 on October 16, 2024. Analysts expect the company to post significant revenue growth, primarily driven by strong sales volumes and a diverse product mix. Over the past six months, Bajaj Auto's stock has surged by more than 30%, reflecting positive market sentiment.

Revenue and Profit Projections Based on a poll of eight brokerage firms conducted by Moneycontrol, Bajaj Auto is projected to report a 23% year-on-year increase in revenue, reaching approximately ₹13,266 crore. Net profit is also expected to see a rise of 21%, growing from ₹1,836 crore to ₹2,227 crore compared to the same period last year. The consistency in earnings estimates suggests that any unexpected variations could lead to significant stock price movements.

Strong Domestic and Export Demand The company's performance has been bolstered by a 16% year-on-year increase in two-wheeler volumes, supported by moderate price increases and an enriched product lineup. Bajaj Auto's strategic focus on expanding its premium two-wheeler segment, coupled with robust export growth and price adjustments, has contributed to its revenue boost.

Rich Product Mix as a Key Growth Driver The company has launched a series of new models over the past year, including the flagship Pulsar variant in May 2024. The expansion into premium segments has played a crucial role in improving the product mix. Additionally, Bajaj Auto's three-wheeler business has shown steady growth, although it is slightly offset by the developing electric vehicle (EV) segment.

Expected Improvement in Margins Analysts predict an improvement in the EBITDA margin by around 52 basis points year-on-year. This anticipated growth is driven by a richer product mix, operational efficiencies, and cost management measures. Better net pricing is also expected to support this expansion.

Factors to Watch in the Quarterly Report Investors will closely monitor several aspects in the upcoming earnings report. These include the demand outlook in both domestic and international markets, developments in CNG and e-mobility, and the company's progress in launching new models. Another key area of interest will be the movement in raw material prices, as it directly impacts profit margins.

Market Performance and Stock Rally Bajaj Auto's stock closed at ₹11,921, marking a 0.2% increase from the previous closing price. The stock has seen an impressive rally of over 30% in the last six months, underscoring strong investor confidence in the company's growth trajectory.

Analyst Insights on Future Outlook Axis Securities highlighted that the anticipated rise in revenue could be attributed to a mild increase in average selling prices (ASPs) due to the enriched product mix. The brokerage notes that the expansion of premium two-wheeler segments and stable export growth will continue to be essential revenue drivers.

Festive Season to Support Further Growth The two-wheeler segment, in particular, is expected to maintain its momentum into the next quarters, especially with the upcoming festive season and a favorable rural demand outlook. According to a report by Prabhudas Lilladher, good monsoon conditions and an increase in rural wedding days are likely to sustain demand in the near future.

Key Risks and Challenges Despite the positive outlook, there are potential risks. Fluctuations in raw material costs, global economic uncertainty, and the competitive landscape in the EV market could impact future performance. Maintaining profitability while expanding the EV segment will be a critical challenge for Bajaj Auto.

Conclusion Bajaj Auto is on track for a strong second quarter in FY25, driven by robust two-wheeler sales, a richer product portfolio, and operational efficiencies. While there are challenges, including raw material prices and competitive pressures in the EV sector, the company's strategic focus on premium segments and cost management suggests a favorable outlook for the coming quarters. Investors will be keenly watching the results on October 16, as any deviation from expectations could lead to significant stock price movements.

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DIIs Net Buy, FIIs Net Sell: A Detailed Market Overview

On October 1, 2024, Domestic Institutional Investors (DIIs) and Foreign Institutional Investors (FIIs) exhibited divergent trading behaviors in the Indian stock market. DIIs continued their buying spree, purchasing shares worth ₹4,610 crore, while FIIs maintained their selling streak, offloading shares worth ₹5,579 crore. This significant data was confirmed through provisional reports by the National Stock Exchange (NSE).

Year-to-Date Activity of DIIs and FIIs

So far in 2024, the trend for both institutions has been consistent with DIIs being net buyers, accumulating ₹4.23 lakh crore worth of shares. In contrast, FIIs have been net sellers, with their total sell-off amounting to ₹1.45 lakh crore. This stark difference highlights the contrasting outlooks between domestic and foreign investors, with the former showing more confidence in the Indian markets while the latter continues to withdraw funds.

Sector-Wise Analysis: Buying and Selling Patterns

During the session, sector-wise movements revealed that DIIs showed keen interest in specific sectors. Major buying activity was seen in media, auto, and IT sectors, indicating a positive sentiment toward these industries. On the flip side, significant selling pressure was observed in the telecom, power, FMCG, Oil & Gas, and realty sectors, driven by concerns over regulatory changes, profitability, and global market dynamics.

Stock Market Performance: Key Gainers and Losers

The overall market witnessed a mixed day. The Sensex closed down by 33.49 points (0.04%) at 84,266.29, and the Nifty slipped by 13.95 points (0.05%) to settle at 25,796.90. While the indices marginally declined, several individual stocks outperformed. Tech Mahindra, M&M, Britannia Industries, Adani Enterprises, and Infosys emerged as top gainers, buoyed by sectoral strength and positive earnings outlooks.

However, major losers included IndusInd Bank, ONGC, Asian Paints, Bajaj Auto, and Titan Company, which faced investor selling pressure due to various factors ranging from sectoral underperformance to profit-booking ahead of key market events.

Market Insights and Expert Opinion

Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, provided a deeper perspective on the day's events. He noted the upward momentum in exchange-related stocks, attributing this to the lack of announcements regarding Futures & Options (F&O) tightening measures in the regulatory meeting. According to Khemka, the market is likely to consolidate in the near term, with stock-specific actions playing a more significant role as the earnings season approaches. Investors will also be closely monitoring upcoming data, such as the U.S. Job Jolts and manufacturing data, which are expected to influence market direction globally.

Conclusion: A Market in Transition

As global factors like U.S. economic data and geopolitical risks, coupled with domestic earnings reports, dominate the financial landscape, the Indian market is in a state of cautious optimism. The significant buy-sell divide between DIIs and FIIs signals the confidence domestic investors have in the market despite external challenges.

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Stock Market Soars: Nifty Crosses 25,900, Sensex Rises by 384 Points to Hit Record Highs

The stock market continued its upward momentum for the third consecutive session on September 23, 2024, reaching fresh all-time highs. The Nifty 50 crossed the 25,900 mark, closing at 25,939.05 with a gain of 148.10 points (+0.57%), while the BSE Sensex surged by 384.30 points (+0.45%) to end the day at a record 84,928.61. This rally was driven by widespread buying across sectors, except for Information Technology, which saw a minor dip.

Market Overview: The day began with a positive opening and traded in a narrow range during the first half, before picking up momentum in the second half, pushing both the Sensex and Nifty to fresh intraday highs of 84,980.53 and 25,956, respectively.

Sector Performance: The market saw broad-based participation, with sectors like PSU banks, real estate, auto, energy, FMCG, metal, and pharma contributing to the rise. The PSU Bank index emerged as the top performer, rallying over 3%, followed by the Realty index, which gained more than 2%. Other sectors like auto, energy, FMCG, metal, pharma, and media posted gains of 0.5%-1%.

However, the Information Technology (IT) sector lagged behind, shedding 0.5%, with Tech Mahindra and other major IT players witnessing some losses.

Top Gainers and Losers: Among the Nifty 50 stocks, Mahindra & Mahindra (M&M) led the gains, rising by 3.35% to close at ₹3,049.80. Other top performers included ONGC, Bajaj Auto, SBI Life Insurance, and Hero MotoCorp. On the flip side, Eicher Motors was the biggest loser, dropping 1.68% to ₹4,879.55, followed by Divis Labs, ICICI Bank, Tech Mahindra, and IndusInd Bank, which also saw marginal declines.

Midcap and Smallcap Performance: The broader markets also witnessed strong interest from investors. The BSE Midcap and Smallcap indices gained 0.7% each, with nearly 350 stocks hitting their 52-week highs. Notable companies included Aditya Birla Fashion, Apollo Hospitals, Bajaj Finserv, Bharti Airtel, Hero MotoCorp, Sun Pharma, and Kotak Mahindra Bank.

Technical Outlook: Market analysts observed that while the Nifty is steadily moving towards the 26,000 mark, a psychological resistance zone, the index may be overbought in the short term. According to technical analysts, a potential correction might occur, with the 25,800-25,850 zone acting as a strong support level. Bank Nifty also showed strength, closing at 54,105.80 and heading towards 55,000, with the support zone now placed between 53,350 and 53,500.

Market Sentiment: Analysts are optimistic about the continuation of the bullish trend but have advised caution due to signs of an overheated market in the short run. Investors are encouraged to adopt a trailing stop-loss strategy to safeguard profits in case of pullbacks. Despite the short-term risk of profit-taking, the broader sentiment remains positive, especially for sectors like banking and realty, which have been top performers.

Conclusion: The record-breaking performance of the markets on September 23 signals strong investor confidence across sectors. However, with key resistance levels approaching, some caution is warranted as analysts predict a potential consolidation or profit-booking phase in the near future. Nonetheless, the market outlook remains positive, with broader market participation and bullish momentum across most sectors.

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FIIs Surge as Net Buyers, DIIs Turn Sellers in Major Market Shift

On September 20, 2024, foreign institutional investors (FIIs) made a notable move by becoming net buyers, purchasing ₹14,064 crore worth of shares. In contrast, domestic institutional investors (DIIs) offloaded ₹4,427.08 crore in equities. This shift occurred after the U.S. Federal Reserve announced a 50 basis point rate cut, boosting global markets, including India.

During the trading session, DIIs bought equities valued at ₹16,987.42 crore but sold ₹21,414.50 crore worth of shares. Meanwhile, FIIs purchased ₹59,452.33 crore in shares while offloading ₹45,388.28 crore in equities, leading to a significant net purchase.

The Indian stock market experienced a sharp rally, with the Sensex closing 1,359.51 points higher, a 1.63% rise to 84,544.31. Similarly, the Nifty index climbed 375.2 points or 1.48%, ending the day at 25,579. All sectoral indices finished in positive territory.

Leading the gains on the Nifty were M&M, ICICI Bank, JSW Steel, Bharti Airtel, and L&T. On the other hand, Grasim Industries, SBI, IndusInd Bank, TCS, and Bajaj Finance were the top losers of the day.

According to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, the markets are gradually climbing, and this positive momentum is expected to continue. Strong FII inflows, healthy domestic macroeconomic conditions, and easing concerns about the U.S. economy are likely to sustain the market's rise.

So far in 2024, FIIs have net sold shares worth ₹1.2 lakh crore, while DIIs have been net buyers, accumulating ₹3.28 lakh crore in equities. Despite FIIs being net sellers earlier in the year, their renewed buying in September has contributed to the market's current strength.

 

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Market Movers: Top 10 Stocks That Defined September 17

On September 17, 2024, the Indian stock market saw a mixed bag of gainers and losers. Sensex and Nifty ended the session with slight gains, powered by telecom, banking, and construction stocks, while metal stocks faced declines. A total of 1,712 stocks advanced, 2,237 declined, and 109 remained unchanged, as per BSE data. Here's a detailed look at the top 10 stocks that saw the most movement:

1. Bajaj Housing Finance
   CMP: ₹181.5 per share
   Bajaj Housing Finance continued its stellar post-IPO performance, with shares hitting the upper circuit and surging by 10%. The stock, which debuted at ₹165, saw a 135% rise from its IPO price of ₹70. Investors remain bullish, extending its rally.

2. IGL
   CMP: ₹547 per share
   Shares of Indraprastha Gas Limited rose over 3% following an upgrade to 'buy' by UBS, which also hiked the target price. The stock rallied further due to strong volume growth prospects.

3. DCX Systems
   CMP: ₹347 per share
   DCX Systems surged to an upper circuit of 5% after announcing that its wholly-owned subsidiary had been granted an industrial license. This was seen as a key growth catalyst for the company.

4. Suzlon Energy
   CMP: ₹81 per share
   After delivering multi-bagger returns of 110% in just three months, Suzlon Energy saw a 4% dip due to profit booking. Despite the correction, the stock is still up 115% for the year.

5. SpiceJet
   CMP: ₹72 per share
   SpiceJet shares dropped nearly 7%, as investors booked profits following the stock's recent rally. The decline comes after the airline opened a Qualified Institutional Placement (QIP) to raise ₹3,000 crore at a floor price of ₹64.79 per share.

6. Geojit Financial
   CMP: ₹155 per share
   Geojit Financial's stock slumped by over 8%, even as the company's Rights Issue Committee is set to meet on September 19 to finalize key details about its upcoming rights issue, including the price and entitlement ratio.

7. Reliance Infrastructure
   CMP: ₹235 per share
   Shares jumped over 9% after the company announced a board meeting to discuss raising long-term funds. The stock surged despite no specific details about the mode or amount of fundraising.

8. Firstsource Solutions
   CMP: ₹308 per share
   The stock climbed by 3% following the announcement of a new partnership with Microsoft. The collaboration aims to deliver cutting-edge digital transformation services, boosting investor sentiment.

9. Ola Electric Mobility
   CMP: ₹118 per share
   Ola Electric Mobility saw its stock hit the upper circuit, rising by 10%, fueled by bullish calls from Bank of America and Goldman Sachs. The stock's growth outlook remains strong, with positive coverage from major global brokerages.

10. MGL (Mahanagar Gas Limited)
    CMP: ₹1,901 per share
    MGL shares rallied by almost 5% after UBS upgraded its rating to 'buy' and increased the target price, citing strong volume growth prospects.

This list highlights the stocks that captured the most attention on September 17, with notable performances from Bajaj Housing Finance and Ola Electric Mobility leading the gains, while profit-booking hit Suzlon Energy and SpiceJet.

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PNB Housing Finance Plans to Raise Up to ₹2,500 Crore Through NCDs

PNB Housing Finance is preparing to raise up to ₹2,500 crore through the issuance of Non-Convertible Debentures (NCDs). The company's board of directors will convene on September 9 to review and approve this proposal. The NCDs will be issued on a private placement basis in multiple tranches over the next six months.

In recent months, PNB Housing Finance has experienced significant changes in its shareholder structure, with notable stake sales by major investors like The Carlyle Group, General Atlantic Singapore, and Asia Opportunities V (Mauritius). This upheaval in shareholding is expected to impact the company's ownership dynamics.

The company reported a 25% increase in net profit for the fiscal first quarter, reaching ₹433 crore, driven by robust growth in home loans. Its gross non-performing assets (GNPA) fell by 241 basis points to 1.35%, and net NPA declined to 0.92%.

On September 4, PNB Housing Finance's shares closed at ₹1052.90 on the BSE, up by ₹50 or 4.99% from the previous day.

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Mazagon Dock, GRSE Surge on Anticipation of New Naval Warship Orders

Shipping stocks, including Mazagon Dock and GRSE, experienced a significant rally on September 3, following reports that the Defence Acquisitions Council (DAC), chaired by the Defence Minister, is likely to approve defense deals worth Rs 1.3 lakh crore. This includes a substantial order for seven new naval warships, estimated to be around Rs 70,000 crore.

 

This expected approval has sparked optimism in defense-related stocks, signaling increased government spending and strategic investments that are anticipated to benefit key players in the shipbuilding sector. Shares of Mazagon Dock soared by 7%, while Garden Reach Shipbuilders & Engineers (GRSE) rose 6%, and Cochin Shipyard gained 3.84%, trading at Rs 1,922.40 on the NSE.

 

The broader interest in defense stocks has been further fueled by Hindustan Aeronautics (HAL) securing a Rs 26,000 crore order. Additionally, the Indian Navy is expected to receive a significant boost in the coming months, with the approval of indigenous construction for three more Kalvari-class submarines by the end of the year.

 

As the Indian Navy seeks to enhance its capabilities amid a deteriorating strategic environment in the Indo-Pacific, the DAC may soon be approached to build advanced Project 15-class destroyers, equipped with anti-ballistic missile systems and drone launch capabilities.

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