Emkay Global Financial has raised its view on Bajaj Auto, saying the company now offers a good balance of risk and reward for retail investors.
Why the Upgrade?
- Fair‑value estimate is 24 times next‑year earnings, lower than peers (38x for TVS and 32x for Eicher).
- Exports are growing fast, especially to Latin America and Asia.
- A refreshed Pulsar motorcycle range is planned for calendar year 2026, supporting a projected 14% earnings‑per‑share (EPS) growth from FY26 to FY28.
Key Growth Drivers
Domestic market share – After hitting a low point, Bajaj’s share in the two‑wheel market has started to rise, helped by stronger sales of premium bikes and e‑scooters in the latest quarter.
Export strength – Export sales now make up about 44% of total volume (up from 39% a year ago). A weaker rupee adds extra margin upside.
Electric three‑wheel (E‑3W) leadership – Bajaj has overtaken its rival Mahindra to become the #1 player in electric three‑wheelers with roughly 31.8% market share by December 2025, while staying #2 in electric two‑wheelers.
Profitability – The electric‑vehicle business has already reached EBITDA breakeven, and a gradual recovery at the KTM brand offers additional upside.
Analyst Outlook
- Rating upgraded to BUY from Add.
- Target price raised by about 17% to ₹11,100 (previously ₹9,500).
- Potential upside of roughly 17% plus a 2.7% dividend yield by December 2027.
- EPS estimates for FY27 and FY28 lifted by 4% and 9% respectively.
- Operating profit in the first half of FY26 expected at ₹2.3 bn, up from ₹0.6 bn in FY25.
What This Means for Investors
The combination of stronger export sales, a new product launch, and a leading position in the electric‑vehicle space makes Bajaj Auto an appealing pick for those looking for growth in the auto sector.
Disclaimer
Remember, this is just one analyst’s view, not a guarantee of future performance. Do your own research or talk to a qualified advisor before making any investment decisions.