Bajaj Auto Loses on Lack of Activity

Bajaj AutoAfter turning ex-dividend, Bajaj Auto lost 1.61% to Rs 2,095 in afternoon trading. The company announced a dividend of RS 40 a share of face value Rs 10 in May 2007.

During the day, the scrip touched an intraday high of Rs 2,133, and an intraday low of Rs 2,088. There were 37,418 shares on the counter. It had an average daily volume of 1.20 lakh shares on BSE in the last one quarter.

At the existing price of Rs 2,095, the scrip trades at a PE multiple of 17.13, which is based on year ended March 2007 earning per share of Rs 122.27.

The Bajaj Auto scrip descended 2.79% in the one month to 27 June 2007 against the Sensex's 0.53% drop. It devolved 11.96% in the past three months against the Sensex's 11.18% rise.

On 13 October 2006, the stock has had its 52-week high of Rs 3175 and a 52-week low of Rs 2,063 on 19 June 2007.

In Q4 ended 31 March, 2007, the company’s Bajaj Auto’s net profit declined 11.1% to Rs 308.31 crore in Q4 March 2007 as against Rs 346.97 crore in Q4 march 2006. Sales moved up 6.8% to Rs 2,313.55 crore in Q4 March 2007 (Rs 2165.86 crore).

Bajaj Auto makes two- and three-wheeler vehicles. Its other actions include insurance and investment business.

On 17 May 2007, the company board sanctioned a demerger scheme, bursting group into three different entities with the formation of two novel companies. According to the demerger scheme, the company’s different business classes such as auto manufacturing and other strategic businesses including wind energy, insurance and financial services, would be demerged into two newly integrated subsidiaries: Bajaj Holdings and Investment (BHIL) and Bajaj Finserv (BFL).

The constructing business would invest in BHIL and other strategic businesses would vest in BFL. After demerging, for each share of Bajaj Auto, the shareowners would keep on holding one share of the company with a face value of Rs 10 and would also be allotted one BHIL share of Rs 10 face value and one BFL share of Rs 5 face value.

As part of the restructuring, BHIL would be renamed Bajaj Auto and the existing Bajaj Auto would be renamed as Bajaj Holdings and Investment.