July 25, 2024
Top 10 Stock Bajaj Auto Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Bajaj Auto – Top 10 Stock in Bombay Stock Exchange Sensitive Index BSE Sensex
Bajaj Auto is listed as a top 10 stock on July 25, 2024 in the market index BSE Sensex because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 74 (high 74% performer), Obermatt assesses an overall buy recommendation for Bajaj Auto on July 25, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Motorcycle Manufacturers |
| Index | BSE Sensex, Independent Boards Growth Markets, CNX Nifty 50 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Bajaj Auto Buy
| 360 METRICS | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 47 |
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| GROWTH | ||||||||
| GROWTH | 81 |
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| SAFETY | ||||||||
| SAFETY | 56 |
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| SENTIMENT | ||||||||
| SENTIMENT | 43 |
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| 360° VIEW | ||||||||
| 360° VIEW | 74 |
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ANALYSIS: With an Obermatt 360° View of 74 (better than 74% compared with alternatives), overall professional sentiment and financial characteristics for the stock Bajaj Auto are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Bajaj Auto. The consolidated Growth Rank has a good rank of 81, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 81% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 56 which means that the company has a financing structure that is safer than 56% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 47 which means that the share price of Bajaj Auto is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 53% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 43, which means that professional investors are more pessimistic about the stock than for 57% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 74, Bajaj Auto is better positioned than 74% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 81), and the company is safely financed (Safety Rank of 56). However, professional market sentiment is low(Sentiment Rank of 43). The negative market view on Bajaj Auto may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Bajaj Auto compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Bajaj Auto only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 43 (better than 43% compared with alternatives), overall professional sentiment and engagement for the stock Bajaj Auto is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and above average for Bajaj Auto. Analyst Opinions are at a rank of 34 (worse than 66% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 68 which means that stock research experts are changing their opinions for the better. In other words, they are getting more optimistic of stock investments in Bajaj Auto. Market Pulse is also positive with a rank of 68, which means that the current professional news and professional social networks are positive in their discussions about this company (more positive news than for 68% of competitors). Only professional investors tend to be absent with a Professional Investors rank of 17, which means that professional investors hold less stock in this company than in 83% of alternative investment opportunities. Pros tend to invest in other companies. But that could also be due to the size of the company. Professional investors tend to invest in XL and XXL companies. If the company is smaller than that, that fact alone may explain why there are fewer pros present. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 43 (less encouraging than 57% compared with investment alternatives), Bajaj Auto has a reputation among professional investors that is below that of its competitors. Since analysts are getting more optimistic and the professional communication channels are positive, it may be an indication of a company that has the difficult times behind it or the stocks’ value is improving. For medium to smaller companies, the positive sentiment indicators outshine the negative. ...read more
Value Strategy: Bajaj Auto Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 47 (worse than 53% compared with alternatives), Bajaj Auto shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Bajaj Auto. Price-to-Profit (also referred to as price-earnings, P/E) is 53 which means that the stock price compared with what market professionals expect for future profits is lower than for 53% of comparable companies, indicating a good value concerning Bajaj Auto's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 25, which means that the stock price is lower as regards to invested capital than for 25% of comparable investments. On the other hand, Price-to-Sales is less favorable than 68% of alternatives (only 32% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 26% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 47, is a hold recommendation based on Bajaj Auto's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Bajaj Auto Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 81 (better than 81% compared with alternatives) for 2024, Bajaj Auto shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Bajaj Auto. Sales Growth has a value of 73, which means that, currently, professionals expect the company to grow more than 73% of its competitors. The same is valid for Profit Growth with a value of 53 and for Capital Growth with 68. In addition, Stock Returns had an above-average rank value of 84, which means they have been higher than 84% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 81, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Bajaj Auto exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: Bajaj Auto Debt Financing Safety above-average
| SAFETY METRICS | July 25, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 62 |
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| REFINANCING | ||||||||
| REFINANCING | 21 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 85 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 56 |
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ANALYSIS: With an Obermatt Safety Rank of 56 (better than 56% compared with alternatives), the company Bajaj Auto has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Bajaj Auto is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Bajaj Auto. Leverage is at a rank of 62, meaning the company has a below-average debt-to-equity ratio. It has less debt than 62% of its competitors. Liquidity is also good at a rank of 85, meaning the company generates more profit to service its debt than 85% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 21, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 79% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 56 (better than 56% compared with alternatives), Bajaj Auto has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Bajaj Auto. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Bajaj Auto Top Financial Performance
| COMBINED PERFORMANCE | July 25, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 47 |
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| GROWTH | ||||||||
| GROWTH | 81 |
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| SAFETY | ||||||||
| SAFETY | 85 |
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| COMBINED | ||||||||
| COMBINED | 81 |
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ANALYSIS: With an Obermatt Combined Rank of 81 (better than 81% compared with investment alternatives), Bajaj Auto (Motorcycle Manufacturers, India) shares have much better financial characteristics than comparable stocks. Shares of Bajaj Auto are low in value (priced high) with a consolidated Value Rank of 47 (worse than 53% of alternatives). But they show above-average growth (Growth Rank of 81) and are safely financed (Safety Rank of 56, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 81, is a strong buy recommendation based on Bajaj Auto's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Bajaj Auto exhibits low value (Obermatt Value Rank of 47), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 81). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 56) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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