Just a while ago JM Morgan Stanley hasdowngraded Bajaj Auto to Equal-Weight from OverWeight. he Target Price has also been downgraded from Rs 3,000 to Rs 2,600.
The research note said, investors should focus not only on the valuation of non-automotive operations if the de-merger proposal goes through, but, more importantly, the value of the underlying core automotive operations.
The downgrade essentially reflects concerns on core implied automotive operations. With core earnings (down to 17.3% CAGR F2007-09E from 20% CAGR in F2003-07) and volume (down to 10.9% CAGR F2007-09E from 21.4% in F2003-07) growth coming off, the valuation multiple on core operations could potentially get de-rated.