CLSA has downgraded Bajaj Auto to underperform, citing weaker-than-expected Ebitda margin performance. The margin came in at 20.2%, an increase of 41 basis points year-on-year (YoY) but flat quarter-on-quarter (QoQ), missing the estimated 21.0%. This was primarily driven by a 130 basis point (bps) decline in gross margin.
CLSA attributed the margin miss to a 300 bps QoQ increase in the volume mix of Bajaj Auto’s electric two-wheeler (E2W) segment. The company’s market share in E2Ws surpassed 20% with the launch of the affordable Chetak model in September 2024, overtaking TVS Motors.
While export volumes are recovering on a lower base, the management noted that, aside from the African market, other regions are showing signs of growth.
Bajaj Auto’s stock is currently trading at approximately 33 times FY26CL earnings per share (EPS).
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