Hold Bajaj Auto; target of Rs 4040: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Bajaj Auto

We increase our FY24/25 EPS estimates by 4% each to factor in higher ASPs and better mix. In 3QFY23, BJAUT’s EBITDA margin +180bps QoQ surprised positively driven by better USD realizations (Rs 81.7 vs Rs 75.1/79.8), superior product mix (premium segment 65% of mix vs 55% in Q2FY23) and higher mix of higher margin spares business. We remain concerned on the export side (~50% of sales) of the business given (1) currency devaluation and unavailability of USD, (2) lower affordability due to price hikes and (3) higher interest rates. Also, lack of market share gains in domestic motorcycles market over last few years, despite aggressive pricing in some segments (motorcycle market share contracted 150bps since FY19), could lead to further pricing actions and pressures on margins.

Outlook

However, we expect BJAUT’s domestic premium segment volumes to grow (similar to the industry), given stabilization in semiconductor supply. Maintain ‘HOLD’ with a target price of Rs 4,040 (Rs 3,820 earlier) at 16x Dec-24E EPS.

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Bajaj Auto - 27 -01-2023 - prabhu