Analyst Call Tracker | What's gotten Bajaj Auto firing on all cylinders again?

Bajaj Auto stock has crashed nearly 12 percent in the last three months.

Just four months ago, on October 17, Bajaj Auto shares tumbled as much as 13 percent after the company trimmed its two-wheeler growth forecast to a modest 5 percent from the earlier projection of 6-8 percent casting a shadow over its prospects.

Now, fast forward to the third quarter. The Triumph maker has delivered a standout Q3, beating analyst expectations with strong revenue growth. A surge in exports—buoyed by a recovery in Nigeria and Latin America—helped offset softer domestic sales. Back home, a stellar Diwali gave the two-wheeler industry a boost, propelling Bajaj Auto to its highest-ever market share in both two-wheelers and three-wheelers. The tide, it seems, is turning.

This is also reflected by the trust analysts have placed in the company, largely impressed by the quick turnaround. Bloomberg data shows that Bajaj Auto has 30 buy calls, 6 hold calls and 9 sell calls.

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But what's gotten Bajaj Auto firing on cylinders again?

Revival in exports: Bajaj Auto’s export business surged in the third quarter of FY25, outpacing industry growth estimates. Nigeria, a key market, rebounded strongly, crossing 100,000 units in sales. Meanwhile, Latin America—nearly twice the size of Africa in motorcycle volumes—continues to offer a vast opportunity. Confident in this momentum, the company expects export volumes to grow in the mid-teen digits in the coming quarters.

Green portfolio turns profitable: This segment also reported a marginally positive EBITDA, marking a shift from losses in the previous year. Back home, Bajaj Auto’s green portfolio is emerging as a major growth driver. Electric vehicles now contribute 22 percent to domestic revenue, while the broader eco-friendly lineup, including CNG models, accounts for 44 percent of domestic sales. The company’s electric three-wheeler market share climbed to 35 percent from just 13 percent a year ago, and the Chetak electric scooter strengthened its position with a 22 percent market share. This segment also reported a marginally positive EBITDA, marking a shift from losses in the previous year.

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"The focus on expanding the premium motorcycles, electric two-wheeler, and electric three-wheeler portfolio, along with leveraging new product launches and the gradual recovery in exports, is expected to provide sufficient operational levers to sustain margins despite rising input costs," Axis Securities said in a recent note.

Strong launch pipeline: Bajaj Auto is set to launch nine new variants of its existing 125cc+ models over the next few months, alongside expanding its EV portfolio. Upcoming launches include advanced e-autos under the Bajaj e-rick/GoGo brand and refreshed models in the Pulsar and KTM Adventure series. In December 2024, it introduced the 35 series for Chetak, with two variants already in the market.

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Premium shift: In the premium motorcycle space, the 125cc+ segment is expanding at twice the pace of the 100cc category, signalling a shift in consumer preference. Bajaj Auto remains bullish on this segment, expecting growth in the 6-8 percent range as it ramps up production of the Freedom 125 and broadens its lineup with new Pulsar, KTM, and Triumph models.

E-rick foray: During the post-result earnings call, the company said it is gearing up to enter the fragmented e-rickshaw market, aiming to launch its maiden eRIC offering by the end of FY25. With India’s e-rickshaw sales surging to nearly 45,000 units monthly, the company is eyeing this segment as a growth driver. Industry estimates suggest nearly half of these sales originate from the northern and eastern parts of the country, where e-rickshaws dominate as an affordable and practical mode of last-mile connectivity

Despite all the growth propellers, all isn't rosy. In Q3, KTM exports fell due to challenges in overseas operations, reducing their share in total exports to 2 percent during the quarter from 5 percent on-year. The management expects recovery post-restructuring in KTM AG (anticipated by February 2025).

Bajaj Auto closed at Rs 8,446, lower by 1.06 percent from the last close on the NSE on February 18. Bajaj Auto stock has crashed nearly 12 percent in the last three months.

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