Bajaj Auto, TVS Motor shares plunge following ban on motorcycles in Lagos

Ban in Nigerian capital triggers anxiety over export prospects for domestic firms

A ban on commercial motorcycles and three wheelers in Lagos, the commercial hub of Nigeria, to prevent accidents in the city, is likely to have minimal impact on Bajaj Auto Ltd. and TVS Motor Company Ltd., unless the ban is prolonged and its scope is expanded to many other cities, said analysts.

Bajaj and TVS export a significant volume of their motorcycles to Nigeria, among other African countries, they added. Company officials declined comment on the likely impact on their exports.

However, the stock market reacted to the news of the ban and Bajaj Auto shares slumped 3.86% to ₹3,162.50 while TVS Motor declined 3.54% to ₹454.55 on the BSE on Tuesday.

Independent analyst Ambareesh Baliga said, “The ban will have more of sentimental impact than any direct impact on sales. The sentiment will be negative if the ban expands to more cities.”

He said because both Bajaj Auto and TVS export to many countries, the impact will be limited.

6% of country volume

It is believed that Bajaj Auto exports about 40,000 to 45,000 motorcycles to Nigeria every month and Logas takes in about 6% of this volume. Nigeria itself is an import export market for Bajaj Auto and accounts for 25% of the total overseas sales. In January, Bajaj Auto reported total motorcycle exports of 174,546 units.

Though the ban in Lagos has been there for several months now, it was confined to several hundred lanes and by-lanes.

As the ban has now been enforced strictly in most parts of city, it has led to protests, thus attracting global attention.

In Lagos, commercial motorcycles have become popular as they help commuters to easily beat the traffic.

Excess speeding has led to fatal road accidents forcing the city authorities to clamp the ban. Recently, motorcycle ride-hailing apps have become popular in the city and the commercial motorcycle fleet have increased in number.

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Printable version | Jun 4, 2020 9:17:18 PM |

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