Buy Bajaj Auto; target of Rs 2833: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com's report on Bajaj Auto (BAL)

"The Bajaj Auto (BAL) management met investors to give an insight into future strategies on product, marketing side coupled with financials. They remain focused on to the idea of "supplying a reason to buy" for the customer and not become commoditised like competition. The management is targeting an increase of the domestic market share in the motorcycle space to 24% cumulating ~218,000 monthly units (increase of 6% from YTD levels). This was further segregated into market share gains in the commuter space via Platina (expect volumes to rise 70% from YTD levels to 70,000 units), premium space via Pulsar (expect volumes to rise 30% from YTD levels to ~78,000 units). BAL is aiming to pull customers away from Hero’s bread and butter segment (Splendor/Passion) either down to Platina or up to 150 cc Discover. The new Platina variant aided with self start capability, new family of Pulsars [(Adventure sport (150cc), Super Sport (200cc), Cruiser Sport (400 cc)] is expected to increase both appeal and volumes."

"BAL is one of the few Indian manufacturing OEMs with a global presence/market share coupled with global R&D standards along with quality management in the automotive space. It remains a decent play among peers considering the stability & quality of earnings coupled with possibility of upsides on success in domestic motorcycle. We believe BAL’s earnings trajectory will remain strong with a CAGR of ~17% in FY14-17E and remains a low-risk, high RoCE business. We value BAL on an SOTP basis, valuing the core business at 15x FY17E EPS and investment in KTM to arrive at a target price of Rs 2833. We have a BUY rating as we believe the risk-reward remains favourable for the stock", says ICICIdirect.com research report.

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