*STOCK UPDATE - Sharekhan * *Bajaj Auto** ** *Recommendation: Hold Price target: Rs2,028 Current market price: Rs1,788
*Strike at Chakan plant to hit production* *Workers at Chakan plant resort to strike* The workers at Bajaj Auto's Chakan plant resorted to a strike, thereby impacting production. The plant employs 925 permanent workers besides 1,000 temporary and contractual workers. The workers are demanding a wage hike of 25% and also permanent employment for the contractual workers. Apart from this, the workers are also demanding an option that would entitle them to subscribe to 500 equity shares of the company at a discounted price of Rs1 per share. *Production to be impacted in near term* The Chakan plant produces 3,000 units/day and produces the premium range of motorcycles Pulsar, Avenger, Ninja and KTM brands. The Chakan plant contributes about 25% of the overall production capacity of the company. Out of the striking workers about 200 employees reported to work and the production was recommenced. However, the production would be sub-optimal. The management estimates the production to dip by 1,000 units/day due to the strike. It expects the plant to produce 50,000 units/month in June 2013 and July 2013 as against the normal capacity of 75,000 units/per month. Overall the production impact is likely to be 50,000 units. *Valuation and view: Maintain Hold but would carefully watch on developments * We assess the production loss of 50,000 units due to the strike. The company, however, has an inventory of four to five weeks, which would shield from an immediate loss in sales. However, the sales may get impacted if the strike persists for a longer period. We are keeping our earnings assumptions unchanged as of now. We maintain Hold recommendation on the stock with a price target of Rs2,028. However, we would be carefully watching developments for any deterioration in the situation. -- CA. Rajesh Desai -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/globalspeculators. For more options, visit https://groups.google.com/groups/opt_out.
