Buy Bajaj Auto; target of Rs 5548: LKP Research

LKP Research is bullish on Bajaj Auto has recommended buy rating on the stock with a target price of Rs 5548 in its research report dated July 26, 2023.

Broker Research

July 29, 2023 / 19:13 IST

Buy

26 Aug, 2025 12:21

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LKP Research's research report on Bajaj Auto

Bajaj Auto Limited (BAL) posted solid margin performance in Q1 despite driven by the challenges in the exports business. Going forward, we believe export volumes have bottomed out as demand is improving now month on month, while domestic 2W volumes should continue their strong run. We also expect a strong traction coming from new launches which would drive overall demand. >125cc segment has provided new identity to BAL. Solid performance of premium Pulsar models, KTM bikes and Triumph models this year should all provide the required fillip to both volumes and margins. On the exports front, markets like Africa is seeing recovery while Latam is stable. ASEAN markets are facing temporary lull and are expected to rise in coming quarters. Brazil is providing a new stream of volumes for BAL. With 2W Chetak expanding its coverage and fetching good response, we believe Chetak to add to the numbers substantially in H2 of FY24. The withdrawal of FAME subsidy remains a concern for the EV 2Ws, but we believe it to impact BAL little. 3W performance was robust in Q1, touching new highs, on CNG success. EV 3W launch should further aid the business. Neutral RM and currency price movement , price hikes planned and prudent cost management should assist margins in the ensuing quarters. With strong balance sheet, robust return ratios, hefty dividend yield of 3.4% and zero financial leverage, we believe the stock still looks attractive at 17.2x FY25E earnings.

Outlook

We therefore maintain our BUY rating on the stock with a target price of ₹5,548 (at 19.5x FY 25E earnings).

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