Neutral Bajaj Auto; target of Rs 8561: LKP Research

LKP Research recommended Neutral rating on Bajaj Auto with a target price of Rs 8561 in its research report dated August 07, 2025.

Broker Research

August 08, 2025 / 10:59 IST

Neutral

26 Aug, 2025 12:21

Volume

Todays L/H

LKP Research's research report on Bajaj Auto

Bajaj Auto (BAL) reported muted Q1FY26 results. Revenue came in at ₹120.8 bn, registering growth of 4.6% YoY and 3.3% QoQ. Domestic performance remained subdued, primarily due to (1) the early and intense onset of the monsoon, (2) elevated inflation in metro cities, (3) purchase deferments by customers, and (4) heightened competitive intensity. However, strong export performance helped offset the domestic weakness, with export volumes witnessing robust growth and premium bike sales reaching an all-time high in international markets. EBITDA margin stood at 19.7% in Q1FY26, down 53 bps YoY and 20 bps QoQ. The decline was driven by an unfavourable currency environment in key export geographies, rising commodity costs, and supply chain disruptions related to rare earth magnets. These challenges impacted production of the Chetak EV and EV 3Ws. The company reported PBT of ₹27.9 bn, with PBT margin improving by 37 bps YoY to 23%, supported by higher other income and lower finance costs. Looking ahead, we expect BAL to face near-term margin pressure due to intensifying competition in the +125cc segment and continued supply constraints stemming from the rare earth magnet shortage.

Outlook

We estimate revenue/EBITDA/PBT to grow at a CAGR of 9%/9%/8% over FY25–27E and value the stock at 25x FY27E EPS, arriving at a target price of ₹8,561.

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