Sell Bajaj Auto; target of Rs 9500: Emkay Global Financial

Emkay Global Financial's research report on Bajaj Auto

BJAUT’s Q2 results were marginally weak on lower ASPs. BJAUT’s 2W retail growth has been muted (FY25YTD: 6.7%; Sep-Oct: 5.7%), with market share loss in the fast-growing 125cc category; management expects FY25 industry growth to be closer to 5% than 8% if the ongoing below-par festive performance persists. Exports are recovering, albeit with the key Nigeria market still 50% below its earlier peak; further, with the 3W industry also now crossing previous highs, an elevated base effect may kick-in.

Outlook

Our estimates are unchanged (FY24-27E EPS CAGR: 13%); we downgrade BJAUT to SELL from Reduce, with new TP of Rs9,500 (26x core Sep-26E vs 23x Jun-26E earlier; revision basis sustained profitability, better EV positioning). We prefer HMCL (better risk-reward), and TVSL (improved growth prospects).