Bajaj Auto stock outlook: Brokerages mostly positive post Q3, but flag valuation discomfort; should you buy?

Bajaj Auto

• Bajaj Auto Q3 profit rose 18.6% YoY to Rs 2,502 crore, slightly below estimates
• Revenue crossed Rs 15,000 crore for the first time; EBITDA up 22.5% YoY
• Brokerages cite strong demand and margins but caution on high valuation levels

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Bajaj Auto delivered largely in-line Q3 FY26 results, aided by strong volume-led growth, resilient margins and steady cash generation. The reported profit came in marginally below Street estimates due to a one-off labour code adjustment. Brokerages noted improving demand, robust margins and strong operational performance, but cautioned about elevated valuation levels.

Bajaj Auto reported an 18.6 percent year-on-year rise in net profit to Rs 2,502 crore, slightly below the CNBC-TV18 poll estimate. Revenue grew 18.8 percent to Rs 15,220 crore, crossing the Rs 15,000-crore quarterly milestone for the first time. EBITDA rose 22.5 percent on-year to Rs 3,161 crore, beating estimates. On a pre-exceptional basis, profit after tax crossed Rs 2,500 crore for the first time.

Bajaj Auto stock call: Brokerages cite demand improvement, margin resilience

Brokerages broadly agreed that Bajaj Auto’s operational momentum remains strong, which fuels medium-term confidence in the stock outlook. But views diverge on how much upside remains at current valuation levels.

Goldman Sachs maintained a Buy rating on Bajaj Auto with a target price of Rs 11,500 per share, implying about 20 percent upside from Friday’s close. The brokerage said Q3 performance was in line, and pointed to early signs of a turnaround in domestic two-wheeler demand. It expects industry growth of 12-15 percent over the next six months, with the 125cc-plus segment outperforming, aided by multiple product refreshes and a new launch.

CLSA reiterated an Outperform call with a target of Rs 11,410, highlighting the 20.8 percent EBITDA margin as broadly in line despite commodity inflation. CLSA flagged currency tailwinds aiding export realisations. It expects domestic two-wheeler growth of 12-15 percent, alongside export growth of 20-25 percent year-on-year, with margins expected to hold up in Q4 despite some commodity pressure.

Nomura retained a Neutral rating with a target price of Rs 10,446, saying that margins were supported by higher PLI benefits. While it sees domestic market share recovery as a key catalyst, Nomura views valuations of around 20 times FY28 earnings as fair.

Valuation concerns temper optimism at higher levels

Jefferies kept a Hold rating with a cautious tone, setting a target of Rs 9,100. While positive on India two-wheeler demand and export momentum, Jefferies flagged concerns over domestic motorcycle market share loss. It also highlighted that Bajaj Auto stock trades at 24 times FY27 earnings -- a premium to its long-term average valuation of 21x.

UBS maintained a Sell rating with a target price of Rs 9,015, saying that Bajaj Auto’s motorcycle-heavy mix remains a structural challenge despite a supportive industry outlook. UBS acknowledged that a three-wheeler mix and lower staff costs supported margins, and noted that electric vehicles accounted for around 25 percent of domestic revenue in Q3.

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