Bajaj Auto Ltd. share price target

Healthy product mix in 2Ws and buoyancy in 3Ws aid 6% YoY increase in Q2 revenue

Competitive position in the 125cc+ segment, expanding premium MC, E2W portfolio and focus on E3Ws provides operational levers to maintain margins. Gradual exports pick up reaffirms our BUY rating on the stock.

Bajaj Auto (BJAUT)’s Q2FY24 EBITDA margin at 19.8%, up 80bps QoQ, was higher than Street’s estimate of 19.4%. The increase in margin was due to lower commodity cost and better product mix. BJAUT expects to drive profitable growth ahead via: 1) growth in 125cc+ segment; ii) sustaining 80%+ market share in ICE 3Ws and expanding further
in e3Ws; iii) steady export recovery across markets; iv) expanding Chetak to >10k units per month; and v) scaling up Triumph/KTM in India/exports.

We maintain our BUY rating on the stock with a target price of Rs 5,400 with a potential upside of 17% from the CMP.

Bajaj Auto’s (BJAUT) Q1FY24 EBITDA margin at 19%, down 30bps QoQ, was in line with consensus estimate at 19.1%. The slight QoQ dip in margin was due to typical seasonal skew for commuter motorcycles on the back of it being the marriage season. Revenue improved 16% QoQ to INR 103bn driven by 31% QoQ volume growth in 2Ws on domestic front cushioning the weak but improving exports performance.