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Sell – Hero Honda+TVS Motors. Hold Baja Auto

July 5, 2007

Citigroup in a its research report releases just a while ago is negative on the prospects of two wheeler manufacturers – Bajaj Auto, Hero Honda and TVS Motors.

Citi sees declining price points at the lower end of the motorcycle market, do not augur well for the sector as a whole. With over 93% of the motorcycle industry consolidated among the top three players, further market share gains among them as a group are capped.

Citi downgraded Bajaj Auto’s price target from Rs 2,600 to Rs 2,275 with a Hold recommendation. EPS estimates for current year is Rs 136.36.

Citi reiterates Sell recommendation on Hero Honda (Rs655 target price) and TVS Motors (Rs56 target price). We also maintain our Hold recommendation on Bajaj Auto (Rs 2275 target price)

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