Motilal Oswal's research report on Bajaj Auto
BJAUT's 2QFY25 performance was in line with our estimates. EBITDA margin remained stable QoQ at 20.2% as the impact of an adverse mix and raw material inflation was offset by price hikes, favorable forex rates, and operating leverage benefits. However, the festive season has started on a weak note, with the industry posting just 1-2% YoY growth as of Dussehra and expecting 3-5% YoY growth during the season, assuming a revival before Diwali. The outlook for its key export market, Africa, remains uncertain, though the margin outlook is improving. BJAUT has outperformed the Nifty Auto Index over the last 12 months, fueled by market share gains in the 125cc+ domestic motorcycle segment, improved margins, and a unique shareholder reward policy.
Outlook
However, the stock now trades at ~38.5x/30x FY25E/26E EPS and appears fairly valued. We maintain our Neutral rating with a TP of INR11,450, based on 26x Sep’26E consol EPS.
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