Shares of Bajaj Auto slumped 13 per cent on Thursday after the company reported a 31.4 per cent decline in consolidated net profit to ₹1,385 crore in the quarter that ended September 30, 2024, as against ₹2,020 crore in the corresponding quarter last year.
All auto stocks closed in red, including Bosch, M&M, and Hero Motocorp, and were under pressure as the Nifty Auto index dipped 3.54 per cent to 24,991.20. Bajaj Auto shares tumbled 13.11 per cent on the NSE to close at ₹10,093.50. It ended at ₹10,095.70 on the BSE, lower by 13.10 per cent.
Bajaj Auto has received mixed recommendations from brokerages. They cited the automaker’s marginally weak Q2 results on lower average selling prices (ASPs), and anticipated weak festive season sales. Global brokerage Citi has issued a sell call on Bajaj Auto at a target price of ₹7,800 per share.
Domestic brokerage Emkay Global has downgraded the stock to ‘sell’ from ‘reduce’ with a new target price of ₹9,500.
Analysts of HDFC Securities expect higher ad spending to promote new launches and a slower recovery in key export markets to weigh on margins in the near term. They have maintained a sell call on Bajaj Auto at a target price of ₹8,433 and added that the rural recovery will remain key monitorable in 2HFY25.
Neutral call
While Macquaire also observed a muted festive outlook against expectations, the brokerage has maintained a neutral stance on the stock at a target price of ₹11,072 apiece.
Motilal Oswal has also maintained neutral rating at a target price of ₹11,450. The domestic brokerage has maintained its FY25/FY26 earnings estimates. It said that the stock has witnessed a significant re-rating in the last 12 months, outperforming the Nifty Auto index, aided by market share gains in the 125cc+ domestic motorcycle segment, improved margins, and a one-of-a-kind policy to reward its shareholders.
Yes Securities has downgraded the stock to neutral with a target price of ₹11,596 from ₹12,277.
Positive stance
Analysts of Nuvama Institutional Equities have been positive on the stock and have increased the target price from ₹12,000 to ₹13,200 with a ‘buy’ call. Bajaj Auto’s presence is improving in the electric/CNG space and share of these vehicles should rise over 20 per cent in domestic two-wheelers in FY27E, according to them. “We are increasing FY25E–27E EBITDA by up to 3 per cent,” they added.
Global brokerage Nomura has maintained a buy rating at a higher target price of ₹13,400.
Elara Capital acknowledged Bajaj Auto’s margin resilience despite variability in its e2W as well as entry-level MC volume contribution in the past two quarters. The brokerage reiterated accumulate rating at an increased target price of ₹13,013 from ₹11,590 earlier.
Weighing on the automaker’s track record of product intervention in the last few years, JM Financial is positive on the stock. Margins in the medium term are likely to draw support from the favourable mix, higher operating leverage and cost reduction efforts, especially for EVs, according to the brokerage. It has maintained a buy rating at a target price of ₹12,750 and has mentioned that a slowdown in the domestic two-wheeler market remains a key risk.
Axis Securities, retaining ‘hold’ call on Bajaj Auto, has increased the target price to ₹11,950 from ₹9,790. “We model a 15.3 per cent CAGR for EBITDA over FY24-27E, driven by expectations of a recovery in exports and stronger domestic sales. We maintain our EBITDA margin forecast of 20-21 per cent for FY25-27E,” the report added.
Another domestic brokerage PL Capital – Prabhudas Lilladher – has also maintained hold call at a revised target price of ₹11,859 from ₹11,146.
