Rajiv Bajaj says Rs 12,000 sounds like fair value for Bajaj Auto stock

Bajaj Auto managing director Rajiv Bajaj said on March 5 the fair value of the stock could be close to Rs 12,000, which is about 43 percent higher from the current price.

The comments come a day before the tendering process for the company’s Rs 4,000-crore share buyback begins. Bajaj Auto is looking to buy back 40 lakh shares at Rs 10,000 apiece.

“Though the stock price has moved up from Rs 4,000 to Rs 6,000 and then to Rs 8,000, in my head, something closer to Rs 12,000 sounds like a fair value,” Bajaj said in an interview to CNBC-TV18.

On March 5, the stock closed at Rs 8,350 on the National Stock Exchange, up 1.74 percent from the previous close.

The stock has more than doubled over the past year ​on the back of a strong premiumisation trend, an acceleration in domestic business and an increased focus on electrification.

“In terms of fair valuation, without taking any company names, I have a basket of companies in my mind that Bajaj Auto can be compared with in terms of performance, PE and future prospects,” said Bajaj.

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The company in January announced a plan to buy back 40 lakh shares, or a 1.4 percent stake, with a face value of Rs 10 each through the tender route, which will commence on March 6 and close on March 13.

The buyback plan received a tremendous response, said Rajiv Bajaj. The stock price moved from about Rs 6,000 to above Rs 8,000 following the announcement.

This is the second time that Bajaj Auto is buying back shares. In 2022, the company purchased shares worth Rs 2,500 crore from holders at Rs 4,600 per share.

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