Brokerages remain divided on Bajaj Auto’s (BAJAJ-AUTO) stock, with Citi and Axis Capital maintaining ‘Sell’ ratings, while Morgan Stanley (MS) is ‘Overweight’, and Nuvama remains bullish with a ‘Buy’ call. Analysts cite strong export growth, margin improvements, and EV traction as positives, but market share loss and rich valuations remain concerns.
Citi on Bajaj Auto: Maintains ‘Sell’, target ₹7,900
Citi has reaffirmed its ‘Sell’ rating, citing concerns over market share loss in the highly competitive entry-level bike segment.
- EBITDA slightly ahead of estimates due to better gross margin.
- Management remains positive on 6-8% YoY volume growth in the two-wheeler industry.
- However, Citi notes that rich valuations prevent a more constructive stance on the stock.
Morgan Stanley on Bajaj Auto: Overweight, target ₹9,951
Morgan Stanley holds an ‘Overweight’ rating, highlighting steady earnings and strong export momentum.
- Standalone EBITDA in line with estimates.
- Exports expected to grow over 20% YoY, supporting volume growth.
- EV portfolio (including PLI benefits) is now EBITDA positive, improving profitability.
- The Chetak 35 platform is driving margin expansion in the two-wheeler segment.
Axis Capital on Bajaj Auto: Maintains ‘Sell’, cuts target to ₹7,550
Axis Capital remains bearish, maintaining its ‘Sell’ rating and cutting the target price to ₹7,550 from ₹8,000.
- Q3 EBITDA was largely in line with estimates.
- Strong YoY growth in Latin America and sequential recovery in Africa were positives.
- However, the company lost over 100 bps market share in 9MFY25, raising concerns.
- EPS estimates for FY25-27 have been cut by 7% due to lower volume assumptions.
Nuvama on Bajaj Auto: Maintains ‘Buy’, target ₹10,700
Nuvama continues to remain bullish on Bajaj Auto, maintaining a ‘Buy’ rating.
- EBITDA slightly above estimates, driven by pricing, scale, PLI incentives, and cost savings.
- Management sees a positive volume outlook for the next 3-6 months.
- Exports are expected to grow over 20%, while domestic growth remains at 6-8%.
- Two-wheelers are projected to clock a 7% CAGR in volumes over FY25-27.
- Revenue and EBITDA CAGR for FY25-27 expected at 11% and 12%, with an average RoE of ~35%.
Market Outlook
While Nuvama and MS are bullish on Bajaj Auto’s long-term prospects, Citi and Axis Capital remain cautious, citing market share losses and expensive valuations. Investors will closely track export performance, domestic recovery, and EV segment growth in the coming quarters.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult professionals before making investment decisions. Business Upturn is not responsible for any investment outcomes based on this report.
