Reduce Bajaj Auto; target of Rs 4438: HDFC Securities

HDFC Securities' research report on Bajaj Auto

Bajaj Auto’s Q1 PAT at INR16.6bn (+16% QoQ and +42% YoY) was in line with our estimate, even as margins missed estimates. The margin miss was primarily due to an adverse mix of lower-end motorcycles and a lower 3W mix. Management indicated that although retail demand in key export markets is likely to have bottomed out, the lack of availability of USD for trade remains the major factor hampering export visibility. The domestic motorcycle industry continues to see weak demand and management is now guiding for 4-6% volume growth over the next few months, largely driven by the 125cc and above segments. Triumph has garnered orders for 17k units in a very short span and the ramp-up of the same would be one of the key monitorables in the coming quarters.

Outlook

However, at 18.5x FY25E, most of the positives seem priced in. Reiterate REDUCE with a revised TP of INR 4,438 (earlier INR 4,028), as we roll forward to June’25 EPS core business, valued at an unchanged 16x multiple.