Bajaj Auto Q1 Results Review - Inline; Stable Margin Despite Increase In EV Mix: Motilal Oswal

Motilal Oswal Report

Bajaj Auto Ltd.'s Q1 FY25 performance was in line with our estimates. Margins remained stable QoQ, despite electric vehicle ramp-up, due to Production linked incentive accrual and favorable forex. We believe Bajaj Auto is likely to continue to outperform the domestic motorcycle industry on the back of its focus on 125cc+ segment; however, the export outlook remains uncertain.

We have marginally lowered our FY25/FY26 estimates to factor in persistent weakness in exports. Bajaj Auto has significantly outperformed the Nifty Auto Index, led by market share gains in the 125cc+ domestic motorcycle segment, improved margins, and a one-of-a-kind policy to reward its shareholders.

After the sharp rally, however, the stock at ~31 times/25.5 times FY25E/26E EPS appears fairly valued. We reiterate our Neutral rating with a target price of Rs 8,695 (based on 22 times June-26E consolidated earnings per share).

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