Bajaj Auto Q4 Review: Motilal Oswal Maintains 'Neutral', Says KTM Turnaround To Be Among The Key Monitorables

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Motilal Oswal Report

Bajaj Auto Ltd.’s Q4 FY25 earnings at Rs 20.5 billion were broadly in line with our estimate. Margins remained stable YoY at 20.2% as benefits from favorable currency and improved mix were offset by the impact of stoppage of exports to KTM and higher promotional spends.

While a recovery in exports and a healthy ramp-up of Chetak and three-wheelers are key positives, its market share loss in domestic motorcycles, that too in its bread and butter 125cc+ segment, remains the key concern.

Further, the ramp-up of its CNG bike Freedom has been slower than expected. While Bajaj Auto has acquired a controlling stake in KTM under a lucrative deal, its effectiveness depends on how quickly it is able to turn around its operations, which will remain the key monitorable from hereon.

At ~26.9x/24x FY26E/27E EPS, Bajaj Auto appears fairly valued. We maintain a Neutral rating with a target price of Rs 8,688, based on 24x FY27E core EPS.

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