Bajaj Auto share price recovers 24% from April lows. Is the rally sustainable?

Bajaj Auto share price in focus: Shares of Bajaj Auto, one of the leading two-wheeler manufacturers, resumed their winning streak on Wednesday, May 21, gaining 2.5% to hit the day's high of ₹8,765 apiece. This came after a brief pause in the previous session due to a sudden market crash.

Since May 8, the shares have strengthened 13.5%. However, analysts see limited upside in the stock amid a lack of volume. Anshul Jain, Head of Research at Lakshmishree Investments, said that Bajaj Auto has formed a bearish reversal structure on the daily chart, coinciding with the auto index correcting from its swing high.

"The stock’s recent rally lacked volume strength, and the ongoing reversal is also occurring on lower volumes, indicating weak bullish conviction. A follow-through move on the downside is likely, with the 20-day EMA placed near 8,250 acting as the next logical target in the short term if selling pressure persists," he further stated.

Shares recover 24% from April lows

After being under pressure for six consecutive months, the shares made a comeback in early April and have maintained their momentum so far in the current month. As a result, the stock has recovered 24% from its April 7 low of ₹7,089 apiece.

Despite this notable recovery, the stock is still trading 33% below its all-time high of ₹12,744 apiece recorded in September 2024. Recent media reports stated that its wholly owned subsidiary, Bajaj Auto International Holdings BV, Netherlands, secured a €566 million loan from offshore lenders, speculating that the funds may be used for the restructuring of KTM AG.

In its regulatory filing on May 19, the company clarified that it is currently in negotiations and exploring various alternatives to participate in the restructuring of KTM AG, pursuant to a plan approved by the latter’s creditors. "Involvement by Bajaj Auto BV in the restructuring as well as arrangements in this behalf are being finalized, and the company will make necessary disclosures at the appropriate time in accordance with Regulation 30 of the Listing Regulations," the company said.

Meanwhile, the company is scheduled to release its financial results for the March quarter on May 29. It posted a 6% decline in its total sales to 365,810 units in April, against 388,256 units sold a year ago.

Domestic sales were down 11% year on year to 220,615 units, while exports were up 4% to 145,195 units. In the reported month, two-wheeler sales dropped 7% to 317,937 units, while commercial vehicle sales grew by 3% to 47,873 units.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.