Bajaj Auto Share Price Comes Out Of Four-Day Fall After CLSA's 'Outperform' Upgrade

Bajaj Auto Ltd.'s share price came out of its four-day losing streak and rose on Thursday, after getting a rating upgrade from CLSA. The brokerage has an 'outperform' rating as the stock saw steep correction in the near past. It previously had an 'underperform' rating.

The share has fallen consecutively for four consecutive months (including January till date). From its September close, it is trading 29% down.

According to CLSA, the stock is trading at 21 times FY27 earnings versus the long-term average of 19 times and its market share in electric two-wheelers crossed the 25% mark In December with the launch of a cheaper Chetak variant.

Moreover, despite scaling up e-2Ws, the company has been able to maintain its margin at 20%, which is a credible achievement, according to the brokerage.

"We thus believe BJAUT deserves a 10-20% premium multiple over the long term average moving forward," it said. The brokerage has a target of Rs 9,493 for the stock, implying 8.7% upside.

Bajaj Auto's export volumes are recovering slowly, with markets such as Latam and Asean witnessing growth and African markets remaining flat, the brokerage said.

"As opposed to being strong in the premium segment, we believe BJAUT will continue to face rising competition from TVS Motor, Honda Motorcycle & Scooter India and Hero MotoCotp in the executive segment, though it is trying to convert 100cc model buyers to 125cc models," it noted.

It also pointed out that its numbers for BJAUT could prove conservative. "We build in 6% motorcycle volume Cagr in FY24-27CL versus an 8% volume Cagr for the industry," it said.

On Thursday, the stock rose as much as 2.96% to Rs 8,898 per share. It pared gains to trade 1.1% higher at Rs 8,744 apiece, as of 9:40 a.m., compared to a 0.4% decline in the NSE Nifty 50.

It has risen 14% in the last 12 months. Total traded volume so far in the day stood at 0.25 times its 30-day average. The relative strength index was at 40.4.

Out of 47 analysts tracking the company, 24 maintain a 'buy' rating, 11 recommend a 'hold' and 12 suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 24%.