What is your view on Bajaj Auto? Is the stock worth buying after the relatively good results that they announced in June quarter?

You are right that compared to other auto companies, Bajaj Auto has done relatively well. The net profits of Bajaj grew by just 1% at Rs. 1126 crore even as total sales for the period was up by 4% at Rs.7756 crore. Within the two wheelers space, TVS Motors had shown poor performance a few days back and from that point of view, Bajaj has surely done better.

One of the reasons for the good performance put up by Bajaj Auto is better realizations with their overall realizations going up by 4.1% on a YOY basis. This better price realization is due to a mix of price hikes, better production positioning in the market and also its strong focus on exports where the market has traditionally been less price sensitive. The EBITDA margin contracted by 250 bps but at 15.5% it is still at a more comfortable level.

Bajaj Auto is available at 15X P/E Ratio despite its EBITA margins at above 15%. That limits downside risk and makes the stock a good medium to long term bet in your portfolio.