Bajaj Auto shares rise 2% after CLSA upgrade to 'outperform' post recent correction

Bajaj Auto stock was also among the top three gainers on the Nifty 50 index.

Shares of Bajaj Auto were buzzing in trade, rising 2 percent on January 9 after brokerage firm CLSA upgraded it to an 'outperform' call from the previous 'underperform' rating. The upgrade stemmed from the recent correction in the stock combined with growth prospects of Bajaj Auto's electric two-wheeler business.

CLSA has set a price target of Rs 9,493 for the stock, translating into a potential upside of nearly 10 percent from Wednesday's closing price. At 11.02 am, shares of Bajaj Auto were trading at Rs 8,786.25 on the NSE. The stock was also among the top three gainers on the Nifty 50 index.

The stock has corrected 32 percent over the past four months and is currently trading at 21x its expected FY27 earnings, slightly above its long-term average of 19x.

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In December, Bajaj Auto's market share in the e-2W segment surpassed 25 percent, boosted by the launch of a more affordable Chetak variant. The brokerage highlighted the company's ability to maintain a 20 percent margin while scaling up its e-2W operations, touting it as a significant achievement.

While Bajaj Auto has been strong in the premium segment, CLSA believes the company will face increasing competition in the executive segment from its peers.

Meanwhile, Jefferies has slashed its price target for Bajaj Auto by nearly 23 percent to Rs 10,350. The firm expects overall two-wheeler volumes to grow at a 13-15 percent CAGR (Compound Annual Growth Rate) over FY25-27.