Neutral Bajaj Auto; target of Rs 9151: LKP Research

LKP Research's research report on Bajaj Auto

Bajaj Auto’s Q4 FY25 performance presented a mixed picture across its key business segments. In the domestic 125cc+ motorcycle category—its core strategic focus—the company retained the number two position but witnessed market share erosion, with share declining. This reflects heightened competitive intensity and indicates challenges in sustaining leadership despite ongoing product interventions. In the 2W EV segment, Bajaj Auto saw a sharp rise in market share in Q4 FY25, making it the top-selling EV brand in India during the quarter. The improvement was largely supported by the 35 Series platform, which introduced upgraded features and styling. Although the EV business has transitioned from being significantly margin-dilutive to approaching EBITDA breakeven—assuming current pricing holds—it still remains exposed to input risks, particularly uncertainties related to the supply of rare-earth magnets from China. The 3W segment reported its highest-ever quarterly volumes in Q4FY25, with the company maintaining a dominant market share in the ICE 3W category. In the EV 3W segment, Bajaj Auto attained leadership during April and May.

Outlook

Given these mixed dynamics and the fact that the current valuation already factors in much of the upside, we maintain a Neutral stance on the stock. Execution on market share recovery and Freedom’s scale-up will be key near-term monitors. We estimate Revenue/EBITDA/PBT to grow at a CAGR of 15.8%/16.8%/15.2% over FY25E-FY27. We have revised our TP at ₹9,151, 24x of FY27E EPS.

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