Bajaj Auto stock plummets to 4-month low, slides 29% from recent peak. Can it fall more?

Shares of Bajaj Auto, one of the leading manufacturers of two-wheelers, fell nearly 2% in trade on Thursday, November 28 to hit a 4-month low of ₹9,013 per share. In intra-day trade, the stock briefly gave up the ₹9,000 level to trade at ₹8,992 apiece. The stock has been on a downward trend since it reached an all-time high of ₹12,774 per share in late September, marking a 29.5% correction from that peak.

The sell-off began after the company reported disappointing financial performance for the September quarter, which prompted analysts to lower their target prices.

Additionally, increased competition in the 2W electric vehicle segment has raised concerns among investors, especially at a time when the company is aiming for the second position in the E2W space and expanding its reach while planning to launch new models.

Further contributing to the negative sentiment, Bajaj Auto reported weak domestic sales for October, with a year-on-year decline of 8%, dropping from 3.29 lakh units to 3.03 lakh units. However, the company saw an increase in its monthly exports, which helped offset the domestic sales dip, resulting in a near 2% growth in total sales to 4.79 lakh units in October.

Despite the growth, total sales still fell short of street expectations. In contrast, peers like TVS Motor, Hero MotoCorp, and Eicher Motors posted significant growth in their monthly domestic sales, ranging from 17% to 26%.

The company’s market share in the two-wheeler (2W) segment also dropped to 11.15% in October, down from 11.84% according to FADA data. Hero MotoCorp maintained the top spot with a market share of 27.92%, followed by Honda at 26.84% and TVS Motor at 17.04%, the data showed.

Bajaj Auto m-cap tumbles by ₹1.19 lakh cr

In October, Bajaj Auto’s stock faced its worst monthly drop since March 2020, plunging 20.33% after the company warned of weak festive sales. The downward trend continued into November, with the stock declining by an additional 8.36%.

This significant correction in the stock price has led to a sharp erosion in the company’s market capitalization, which has fallen from ₹3.71 lakh crore to ₹2.52 lakh crore, resulting in a loss of ₹1.19 lakh crore.

For the quarter ended September 30, 2024, Bajaj Auto reported a 31% year-on-year decline in its consolidated profit after tax, which fell to ₹1,385 crore. This was mainly due to higher expenses and a one-time hit from increased provisions for deferred tax.

While the company’s total revenue from operations rose to ₹13,247 crore for the second quarter, compared to ₹10,838 crore in the same period last year, Bajaj Auto revised its growth outlook for two-wheeler sales in India, lowering its forecast to a modest 5%, at the lower end of its earlier estimate of 5-8%.

Tech View: Can Bajaj Auto stock fall more?

Rajesh Palviya, SVP, Technical and Derivatives Research, Axis Securities, said, “The stock is trending lower, forming a series of lower tops and bottoms representing a short- to medium-term downtrend. The stock is also sustaining below its 20, 50, 100, and 200-day SMA’s, which reconfirms a bearish outlook in the upcoming weeks. Recently, the stock has violated its multiple support of 9320 levels on a closing basis, which signals the bear’s rising grip.”

“The strength indicator RSI is in negative terrain across all the time frames, which shows a loss of strength. The short- to medium-term outlook remains weak with an expected downside of 8500–8000 levels. On the other hand, the crucial supply zones are placed around 10000-10500 levels, and any small relief rally towards the mentioned supply zone may remain as an exit opportunity for traders,” he added.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said, “Bajaj Auto has witnessed a significant sell-off over the past couple of months, erasing more than 30% from its peak. While such corrections often attract long-term investors, the stock has yet to show any clear signs of reversal despite being in the oversold zone.”

“The next critical support lies at 8750, a level that previously triggered a rally in July, propelling the stock to its all-time high of 12774. If the price revisits this support, it could present a staggered buying opportunity for traders,” he noted. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.