Buy Bajaj Corp; target of Rs 520: JM Financial

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26 Aug, 2025 12:21

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JM Financial's research report on Bajaj Corp

Bajaj Corp’s 3QFY18 report was disappointing as volume growth recovery turned out to be well-below our expectations. While the headline numbers were impacted by lower international turnover, domestic business volume growth of 8% was also quite subdued given a highly favourable base (BAD volumes declined 4%, overall volumes down 6.5% in 3Q LY). Reported operating performance for the quarter was partially aided by prior period income (CGST refund pertaining to earlier excise-exempt zones). Excluding this, EBITDA growth was just 2-3% due to the impact of sharp increase in SG&A (+23.7%). The company attributed the disappointment in performance to weakness in the wholesale and CSD channels. Domestic performance of skin-care (Nomarks) has improved significantly, though, and is expected to sustain.

Outlook
We expect the stock to face some pressure in the near-term given the weak results. Given sharp stock-price run-up in recent months (+24% in 3M), signs of a sustained recovery in volume growth trajectory would be a pre-requisite for stock to further perform, despite reasonable valuation (currently trading at 40% discount to the sector), in our view.
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