Bajaj Auto falls 4% on proposed Egypt import ban

Shares in Bajaj Auto fell on news that Egypt's government is proposing a ban on import of motorbikes and three-wheelers, traders said.

Egypt's cabinet gave authority to the finance ministry on Wednesday to temporarily ban the import of 'tuk-tuks', fully assembled motorbikes and their components.

The ban is not final yet but is a potential risk to Bajaj Auto's exports to Egypt, said Morgan Stanley in a note.

The brokerage downgraded the stock to "equal-weight" from "overweight" and cut the price target to Rs 1,983 from Rs 2,124.

"The Egyptian market is mainly for three-wheeler exports, thus it has high margins. It was also recovering over the last few months - hence it is crucial to F15 export growth assumptions," Morgan Stanley said.

Exports form 39 per cent of Bajaj Auto's top line (F14E) and within that Egypt formed 11 per cent, the note said. If Egypt's ban plays out, then exports growth assumptions would fall to 8 per cent in FY15 from 15 per cent currently, it said.

At 2.54 pm, shares in Bajaj Auto were down 3.3 per cent at Rs 1840 after earlier hitting a low of Rs 1820.


Copyright Thomson Reuters 2014