But since then, the markets seem to have reassessed the valuations for Bajaj Auto and the company's scrip has resumed its northward spiral. Besides overperforming the Sensex in the past four weeks, the stock at Rs 650 has managed to come close to its 52-week high. Importantly, the re-rating for Bajaj is not unfounded. The company has managed to post an all-time record of 14.23 lakh vehicular sales. This marks a strong 6.7 per cent growth over last year, which in a recessionary market is good going indeed!

ForBajaj, the star performer has been its Japan-made motorcycle product range clocking impressive volumes - 3.33 lakh units for the period up to February 1999. Also Important for Bajaj, is the market acceptance of its new offerings like Caliber, which is a variant of its Japanese motorcycle range, and other new products like the Legend and Bravo. In fact, the success of Caliber is easily reflected in the fact that Bajaj sold 27,660 units in the motorcycle segment in March 1999, of which the Caliber model accounted for almost 21,800 vehicles. Additionally, while Bajaj might have been slow to respond to changing market trends in the past, it has now definitely got its act together. The company looks ready to claw back its lost market share with a host of new product launches.

So far as sales are concerned, the other two motorcycle manufacturers have also done very well. Thus, the fight in the motor-cycle segment looks well and truly entrenched now. Hero Honda was undoubtedly the star performer in the two-wheelerindustry in 1998-99. That the sales of 5.30 lakh units (a jump of 30 per cent) has helped the company improve its market share from 36 per cent last year to 38 per cent, also re-iterates the company's growth story. As for a strategic decision, the company has decided to keep out of the scooter market for the time being and concentrate on the motorcycle segment.

This interestingly is in sharp contrast to a decision taken by its major competitor, TVS Suzuki, which is putting up a scooter plant near Mysore. The idea, however, did not go down well with the market, as the stock tells the story about the market's concern over the entry into the big league scooter market. The stock has underperformed the Sensex and the performance is equally unimpressive if one compares it with Bajaj Auto or Hero Honda. Thus, analysts say a lot could depend on TVS's ability to aggressively price its models to counter the competitive threat. Herein volumes and the ability to achieve economies of scale could also play an integralrole in driving earnings. This aside, TVS now seems to be getting its act together in the motorcycle segment, which is reflected in the company's move to introduce four stroke motorcycles. This will enable the company to meet the year 2000 emission norms.

In the long-term, Bajaj Auto will be the best performer in the sector. The reason is simple. For the past two years, falling marketshare was the main cause for investor concern. As the company looks poised for a strong comeback on this front, Bajaj's would get the maximum attention. As for Hero Honda, the company will continue to do well. But as all the positive factors are almost factored into the stock price, a dramatic change is unlikely. For LML, its integral problem and Bajaj's recovery will continue to affect the stock price.