Nuvama has increased its target price for Bajaj Auto to INR 13,200, up from the previous target of INR 12,000, following a robust performance in the second quarter of fiscal year 2025. Bajaj Auto’s EBITDA surged 24% year-on-year to INR 26.5 billion, just shy of Nuvama’s estimate of INR 27.3 billion.
The prospects for Bajaj Auto’s two-wheeler (2W) volume are positive, with an anticipated compound annual growth rate (CAGR) of 8% over FY24–27E, driven by 7% growth in the domestic market and 10% growth in exports. The company’s expanding presence in the electric and CNG vehicle segments is expected to boost the share of these vehicles to over 20% in domestic 2Ws by FY27E.
As a result of these positive trends, Nuvama has increased its EBITDA estimates for FY25E–27E by up to 3%. They are projecting a revenue and EBITDA CAGR of 12% and 15%, respectively, over FY24–27E, with an average return on equity (RoE) of approximately 36%.
The firm maintains its “Buy” rating on Bajaj Auto, citing a healthier outlook and improved positioning in the electric and CNG space. The new target price is based on a 38x multiple of September 2026 estimated core earnings, up from the previous 35x, plus cash and investments worth INR 814 per share.
