Bajaj Auto strong Q4 show gets the company three target price hikes — Should you buy?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bajaj Auto’s better-than-estimated results for the January to March 2024 quarter have compelled at least three global analysts to raise their target prices on the auto major’s stock. However, not all of them have given it a buy rating.

The increase in target price comes as the analysts expect the Pune-based two- and three-wheeler maker to gain market share in the domestic motorcycle segment in the 2024-25 financial year. Exports recovery, on the other hand, is expected gradually.

Jefferies has raised its target price on Bajaj Auto shares to ₹10,500 with a ‘buy’ call. The brokerage expects a 16% upside from the closing price of the stock on April 18. It has also raised its FY25-26 earnings per share (EPS) estimate by 4%.

The brokerage said it continues to like the company as it expects rising Indian two-wheeler demand. It added that cyclical recovery in exports should drive 17% volume CAGR over FY2024-26.

Bajaj Auto has risen to the number three position in the electric two-wheelers space and is expanding its portfolio, Jefferies pointed out.

CLSA, too, raised its target price on the stock to ₹6,889 but retained its ‘sell’ rating. The target price still implies a 23% downside from Thursday’s closing price. It believes the stock is overvalued following the recent rally.

The brokerage expects the firm to gain market share in the domestic motorcycle segment in FY25 aided by new launches. Additionally, it expects export volumes to increase at a mid-single-digit rate.

Global brokerage Citi also has a ‘sell’ call on the stock but has raised the target price to ₹6,500. It noted that the management’s commentary was positive on domestic two-wheelers demand whereas exports recovery is likely to be more gradual.

The management also noted that there could be some disruption in electric two-wheelers’ demand on reduction in subsidy while three-wheeler demand growth should moderate in FY25 compared to FY24 levels. The focus is on gaining market share in 125cc+ bikes aided by new model launches, Citi said.

Bajaj Auto shares traded 2.25% lower at ₹8,815.30 on BSE at 9:18 am. In the past six months, the stock has made investors 62% richer compared to a 9.5% rise in the benchmark Sensex.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow