Kotak downbeat on Indian two-wheeler makers; says valuations 'irrational'

YAMAHA

08/12/2023 08:28

** Shares of Bajaj Auto Ltd  BAJA.NS , Hero MotoCorp Ltd
 HROM.NS  and TVS Motor Company Ltd  TVSM.NS  down between 0.5%
and 1.7%
    ** Kotak Institutional Equities says stocks' valuation
"irrational;" adds, trading above their long-term
price-to-earnings ratios
    ** Brokerage maintains "reduce" on top 2-wheeler maker Hero,
"sell" on rivals Bajaj, TVS
    ** Discounted cash flow (DCF) market share of two-wheeler
cos combined with Eicher  EICH.NS  forms 90% but is not
justified by sales growth projections from FY23-36 of 6% CAGR
-Kotak
    ** With strong presence of Japan's Honda, Suzuki and Yamaha
and newer EV makers, Hero, Bajaj and TVS unlikely to reach DCF
market share of 90% - brokerage
    ** CLSA also downgraded two-wheeler stocks earlier this week
    ** BAJA, TVS have vastly outperformed Nifty Auto index
 .NIFTYAUTO  YTD, while HROM is trailing the index's ~41% jump


 (Reporting by Nandan Mandayam)
 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))