Bajaj Auto slumps

Bajaj Auto continues to remain in the red. The stock is down almost 1.5% at Rs.1815.75, with an intra day low at Rs.1809.15.

The stock is in the red on news that the Egyptian Govt is proposing a ban on import of motorbikes and three-wheelers. This is yet to happen but the potential risk to Egypt’s earnings, if it happens, is high.

Morgan Stanley has put out a report stating that Egyptian market is mainly for three-wheeler exports, thus it has high margins. It was also recovering over the last few months - hence it is crucial to F15 export growth assumptions.” It went on to state, “exports form 39% of Bajaj Auto's top line (F14E) and within that Egypt formed 11% . If Egypt's ban plays out, then exports growth assumptions would fall to 8% in FY15 from 15% currently.