Neutral Bajaj Auto; target of Rs 8695: Motilal Oswal

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Motilal Oswal's research report on Bajaj Auto

BJAUT’s 1QFY25 performance was in line with our estimates. Margins remained stable QoQ, despite EV ramp-up, due to PLI accrual and favorable forex. We believe BJAUT is likely to continue to outperform the domestic motorcycle industry on the back of its focus on 125cc+ segment; however, the export outlook remains uncertain. We have marginally lowered our FY25/FY26 estimates to factor in persistent weakness in exports. BJAUT has significantly outperformed the Nifty Auto Index, led by market share gains in the 125cc+ domestic motorcycle segment, improved margins, and a one-of-a-kind policy to reward its shareholders. After the sharp rally, however, the stock at ~31x/25.5x FY25E/26E EPS appears fairly valued. We reiterate our Neutral rating with a TP of INR8,695 (based on 22x Jun’26E consol. EPS).

Outlook

BJAUT has witnessed a significant re-rating in the last 12 months, aided by market share gains in the 125cc+ domestic motorcycles segment, improved margins, and a one-of-a-kind policy to reward its shareholders. After the sharp rally, however, the stock at ~31x/25.5x FY25E/26E EPS appears fairly valued. We reiterate our Neutral rating with a TP of INR8,695 (premised on 22x June-26E consol EPS).

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