Bajaj Auto's Chakan plant affected by employee strike - Angel Broking

According to a BSE filing, production at Bajaj Auto's (BJAUT) Chakan plant has been affected due to a labor strike. The filing states that the workers at the Chakan plant have stopped coming to work from June 25, 2013 following management's refusal to concede to their demand. The workers at the plant have been demanding an option to subscribe to 500 equity shares of the company at a discounted price of Rs. 1/ share (as against current market price of Rs. 1,800/ share). The workers union at the Chakan plant, Vishwa Kalyan Kamgar Sanghatana had earlier proposed for a stoppage of work from the morning shift of June 28, 2013.

The Chakan plant has an installed capacity of 1.2mn units (~22% of the total installed capacity) and it manufactures products like Pulsar, Avenger, Ninja and KTM. We would like to seek more clarity from the management and remain watchful of the future development on this front. We do not see any immediate impact of the strike on the company's sales given that it has an inventory of around 5-6 weeks in the system.

At Rs. 1,800, the stock is trading at 13.1x FY2015E earnings. We maintain our Accumulate rating on the stock with a target price of Rs. 2,056.

Source : Equity Bulls

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