The big gainer this morning – Bajaj Auto surged over 4% to hit a 52-week high of Rs 10,838 on the NSE. The stock was the top gainer in the Nifty 50 a day after it reported its first quarter performance for FY27. The brokerage houses raised their target price on the stock on the back of robust exports.
Nuvama on Bajaj Auto
Nuvama Institutional Equities raised the price target on Bajaj Auto to Rs 12,000 a share from Rs 11,600 earlier. The new price target sees an upside of 15.3% from the current market price, while maintaining the ‘Buy’ rating. The stock trades at a PE of 30x for FY26, 24x for FY27, and 21x for FY28.
The brokerage house said that the company’s Q1 revenue grew 37% YoY to Rs 17,240 crore, in line with estimates. EBITDA jumped 45% to Rs 3,600 crore, above estimates on lower other expenses. We increase FY27-28 EBITDA by 3% each, led by higher volume assumption.
“We build in total volume CAGR of 12% over FY26–28 on 7% growth in domestic and 17% in exports. We reckon domestic two-wheeler market share recovery from 10.7% in FY26 to 11% in FY28 led by refreshes under Pulsar, KTM, and Triumph brands and two new 125cc motorcycles,” said Nuvama.
Motilal Oswal on Bajaj Auto
On similar lines, Motilal Oswal Financial Services upgraded the auto stock to a ‘Buy’ rating from ‘Neutral’, while raising the 12-month price target to Rs 12,096, a 16% upside. It finds the valuation attractive. The brokerage said that the company displayed business resilience yet again and the management gave “promising outlook across segments.”
The two-wheeler giant demonstrated business resilience once again in 1Q as the company sustained its high margins despite the surge in input costs. “Considering its healthy launch pipeline, we expect the company to gradually recover market share in the domestic motorcycle market,” said Motilal Oswal.
Export outlook continues to be healthy, with management targeting over 2.5 lakh units of exports per month in Q2. It continues to outperform even in EVs, both 2Ws and 3Ws. Given a better-than-expected performance in Q1 and a strong outlook across segments, we raise our EPS estimates by 5% for FY27 and 9% for FY28.
Given the strong earnings forecast, healthy return ratios, among-the-best dividend payouts and a resilient business model, valuations at 23x for FY27 and 19.6x for FY28 EPS appear attractive.
JM Financial on Bajaj Auto
Things don’t go down the same for everyone as JM Financial maintained its ‘Reduce’ call on the stock, it finds domestic weakness persistent. However, the brokerage still raised the price target to Rs 9,850 from Rs 9,600 on the back of “meaningful gains” in exports.
The auto company’s management indicated domestic motorcycle demand has underperformed two-wheeler industry growth primarily due to slower growth in the below-125cc segment.
The company’s market share has fallen marginally (10.5% in Q1FY27 versus 10.8% in Q4FY26) despite recent refreshes and remains way below 12.1% in Q3FY24, and traction beyond Pulsar has been muted. This prompted the brokerage to expect no meaningful gains in market share despite further launches.
The company’s Q1FY27 EBITDA margin came in at 21%, over 110 basis points YoY and 10 bps QoQ, led by operating leverage and currency tailwinds (USD/INR realisation at 94.4 versus 90.6 QoQ), partly offset by higher RM.
Exports, however, remain strong, driven by Africa and Latam.
“We expect 14% volume growth in FY27 (11% earlier) primarily led by exports. Raw material inflation coupled with cost associated with new launches is expected to weigh on margins. However, cost optimisation and currency tailwinds could provide a cushion,” said JM Financial.
Bajaj Auto share price performance
The share price of Bajaj Auto has risen 4% in the last five trading sessions. The stock has given a return of 5.7% in the past one month and 15% in the last six months. Bajaj Auto’s share price has given a return of 30% over the previous 12 months.