Motilal Oswal's research report on Bajaj Auto
BJAUT’s 1QFY26 earnings at INR20.6b beat our estimate of INR19.8b, aided by higher-than-expected other income even as margins were in line with our estimate at 19.7%. Margin has fallen below 20% for the first time in seven quarters. While a recovery in exports and a healthy ramp-up of Chetak and 3Ws are key positives, its market share loss in domestic motorcycles remains the key concern. Further, the ramp-up of its CNG bike, Freedom, has been slower than expected. BJAUT has acquired a controlling stake in KTM under a lucrative deal, though its effectiveness depends on how quickly it is able to turn around its operations,
Outlook
Which will remain the key monitorable from hereon. At ~25.4x/22.7x FY26E/FY27E EPS, BJAUT appears fairly valued. We maintain a Neutral rating with a TP of INR8,618, based on 22x Jun’27E core EPS.
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