Global brokerage house CLSA in its latest report has projected a 40% downside for Bajaj Auto, maintaining its "Underperform" rating on the stock with a target price of Rs 7,000 per share. This cautious outlook is attributed to several factors impacting the company's performance and market positioning.
CLSA's assessment comes after the recent launch of two new motorcycles from Bajaj and Triumph, the Speed T4 and the MY25 Speed 400. These entry-level models are designed to compete in the premium motorcycle segment, particularly targeting the 350cc+ category dominated by Royal Enfield. The Speed T4, priced at Rs 2.17 lakh, and the MY25 Speed 400, priced at Rs 2.40 lakh, are positioned as competitive offerings with segment-leading performance specifications.
Despite the promising entry-level models, CLSA remains wary due to the increasing competitive intensity in the premium motorcycle market and a general moderation in growth within the >250cc motorcycle segment. The report highlights that while Bajaj delivered approximately 60,000 Triumph bikes in Financial Year 2024, the volume run rate for these models has not significantly changed since the launch of the first Triumph bike.
Additionally, CLSA notes continued pressure in export markets and a slower growth rate in the >250cc segment compared to the overall motorcycle industry. The stock currently trades at a P/E ratio of 33x for Financial Year 2026, adding to the brokerage's concerns about its valuation.
Bajaj Auto's current export run rate for Triumph motorcycles stands at around 2,500 units per month, while the domestic market accounts for approximately 3,500 units per month. The impact of the new launches on these volumes remains a critical factor to watch.
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