Bajaj Auto share price targets post Q4 results suggest up to 16% upside. Key triggers for stock

Bajaj Auto's March quarter results were a beat on operating performance, but a few analysts believe Bajaj Auto's underperformance vis-à-vis industry is likely to persist, owing to its weak presence in scooters in the domestic market, not to mention its large exposure to overseas markets. Price targets of 16 domestic and foreign brokerages suggest up to 16 per cent potential upside on the counter. A few targets even suggest up to 7 per cent downside.

Product mix

HDFC Institutional Equities, which has the lowest target among 16 brokerages, said the domestic motorcycle industry continues to see demand weakness and noted that the Bajaj Auto management has guided for 6-8 per cent industry volume growth over next few quarters .

"We believe that once volumes revive, even the current favourable mix will normalise. This coupled with the slight under-recovery of the recent cost inflation is likely to

keep margins under pressure from here on. At 17.6 times FY25E, the stock appears expensive," it said.

New models

ICICI Securities said models co-developed with Triumph would see a global launch by June-end and subsequently get retailed in India from H2CY23. This brokerage has increased its FY24/25 Ebitda estimates by 4 per cent mainly driven by an increase in average selling price (ASP) estimates and a slight increase in Ebitda margin by 20-30 bps.

Market share gain

Nirmal bang Institutional Equities said Bajaj Auto has gained 2 per cent market share in the 125cc+ segment. Refreshed product portfolio has helped Bajaj Auto achieve more than 50 per cent of its volumes in 125+cc segment, it said adding that Bajaj Auto seems to have sharpened its focus on EVs with network expansion and enhancement of the product

range from entry-level models to premium models. The brokerage said Chetak production is expected to ramp-up to 10,000 units from June onwards, but the company continues to face challenges in the export markets due to adverse economic situations, particularly in Africa and LATAM regions.

Export recovery

Elara Securities expects exports recovery to be gradual for Bajaj Auto/ Exports may post an 12 per cent CAGR in FY23-25E, it said adding that FY25 exports may still be 10 per cent below FY22 peaks.

"Volume cuts are set to be largely offset by increased ASP and margin, resulting in 1-4 per cent EPS rise in FY24E-25E. We believe the catalyst for stock price movement would be export volumes revival (likely to be gradual) and Triumph volume ramp-up," it said.