'Buy' Bajaj Auto Says Anand Rathi As It Initiates Coverage

Anand Rathi Report

We expect strong 14%/19%/21%/22% volume/revenue/ EbitdaA/core profit after tax growth over FY24-27 driven by an upswing in domestic/ export markets and market-share gains of Bajaj Auto Ltd. led by the success of its CNG two-wheelers, electric vehicles and Triumph range.

The stock is being re-rated from an underperformer in the past to an outperformer as has started gaining domestic market share. Ahead, we expect the company to outrun TVS; hence valuations would further catch up with TVS (P/E multiple of 32 times applied, versus 35 times for TVS).

Key risks:

Slower-than expected domestic and export industry volume trends, Keener competition and margin pressure due to lower profitability in EVs and commodity prices/forex rates.

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