Accumulate Bajaj Auto; target of Rs 2571: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey`s research report on Bajaj Auto“Bajaj Auto, net sales and operating income for Bajaj auto increased by 14% Q-o-Q and 15% Y-o-Y to Rs5963Cr. in Q2FY15 led by healthy growth in the three wheeler segments and increased contribution from exports. EBITDA was reported at Rs.1127Cr. growth of 22% sequentially while it was flat Y-o-Y mainly due to increase in other expenses, RM costs and employee expenses. PAT was reported at Rs.591Cr. down by 20%Q-o-Q and 29%Y-o-Y which was dragged due to tax penalty to be paid to Uttarakhand government to the tune of Rs.340.29Cr.""Bajaj Auto recorded healthy growth of 14%Y-o-Y and 15%Q-o-Q in Net income which was reported at Rs.5963Cr. due to significant improvement in volumes to 1055582 units up 7%Q-o-Q and 8%Y-o-Y while realizations also improved by 7%Y-o-Y and 6%Q-o-Q. Volume growth remained health during the quarter with CVs and exports providing the necessary cushion from the poor performance from the domestic segment. The EBITDA was reported at Rs.1127Cr. an increase of 22%Q-o-Q but flat Y-o-Y showing a stress on the operation efficiency of the company wherein RM costs have increased by 14%Q-o-Q and 18%Y-o-Y to Rs.3838Cr. while other expenses increased by 20%Q-o-Q and 31%Y-o-Y to Rs.532Cr. The EBITDA margin saw a contraction by 298bpsY-o- Y but improved by 129bps Q-o-Q to 18.9% in Q2FY15. Bajaj Auto reported subdued numbers on profitability front with PAT down by 20%Q-o-Q and 29%Y-o-Y to Rs.591Crs. PAT was dragged down due to ruling by the Uttarakhand High court that the levy of ‘national Calamity Contingent Duty’ is out of the purview of the exemptions granted to the company and hence a company is liable to pay the disputed duty of Rs.340.29Cr. PAT margins were down by 427bps Q-o-Q and 640bps Y-o-Y to 10.1%.""Topline for Bajaj auto increased mainly led by strong exports, larger acceptance of its three wheelers along with issuing of new permits in the domestic markets also entry into new geographies aided by a favorable currency situation. The company expects the recently launched discover to bring it incremental volumes while to be launched Pulsar, Platina and RE60 will help further strengthen its hold in the domestic markets. Bajaj already has favorable currency hedge which negate the downward risk to our estimates while the huge cash reserves and returns on the investments in the money markets will boost profitability. At CMP of Rs.2374, the stock is trading at 19x FY15E EPS of Rs.125 & 16x FY16E EPS of Rs.151 which we feel attractive. However, we recommend an Accumulate rating on the stock with a target of Rs.2571,” says KRChoksey research report.

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