Bajaj Auto recovered from its lower levels on Wednesday.

The scrip of the two/three-wheeler firm was up 1% at Rs 508 on the BSE in late-afternoon trades, recovering from the day's low of Rs 496.60. Volumes on the counter were modest, with 28,000 shares changing hands.

The recovery on the Bajaj Auto counter comes after the scrip fell as much as 1.1% to Rs 496.60 earlier during the session, following broad based weakness caused by US-Iraq war fears and concerns over whether foreign institutional investors can continue to invest in the Indian markets through the participatory note route.

The BAL stock has staged a smart comeback in the last few months. From a low of Rs 366.10 on 4 October 2002, it has moved up to hit a recent high of Rs 550 on 2 February 2003. Profit-taking saw the stock slip from the higher levels.

Auto analysts remain positive on the BAL stock, with the company doing well in the bike segment. It is expected to meet the full year bike sales target of 900,000 units.

BAL has reported a 22.5% rise in motor cycles sales at 76,661 units in February 2003, compared to 62,586 units sold in the corresponding period last year. The company clocked sales of 9,207 units for its recently introduced ‘BYK', taking the cumulative sales of this 100 KMPL bike to over 19,000 units. It sold 23,429 units of Pulsar.

For the 11-month period ended February 2003, BAL's motor cycles sales were higher by 35.5% at 7,94,058 units. The company, in order to meet the bike sales target for FY 2002-03, is required to sell 105,000 units in the month of March 2003. Usually, March is the peak month for the automobile sector.

For Q3 ended 31 December 2002, BAL registered a 24% rise in net profit to Rs 134.02 crore, compared to Rs 108.17 crore (Rs 1.08 billion) in the corresponding period of the previous year. Sales increased by 13.15% to Rs 1,273.46 crore (Rs 1.73 billion), from Rs 1,125.38 crore (Rs 11.25 billion) in DQ 2001.

Market players still feel that BAL is a value pick, as the company's medium-term prospects seem enticing. BAL's bike Pulsar continues to dominate the performance and power segment of the motorcycle market.

BAL continues to be a market leader in the entry level and performance segment in respect of bikes, with a greater product and marketing focus being brought in the executive segment - which is represented by the Caliber and Croma. The new 100 cc BYK (code named CBM) is slated for national launch soon. The bike is expected to attract a whole new set of young and first-time buyers of two-wheelers. Also, the 125 cc World Bike is being jointly developed with Kawasaki.

The Budget for 2003-04 was almost neutral for the two-wheeler sector. Companies in this sector will have to pay 1% as national calamity cess. In an envoronment where competition is tough, two-wheeler makers are unlikely to be able to pass on the burden to their customers. However, analysts said the cess may not have an adverse impact on the profitability of these companies.

BSE code: 500490