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Bajaj Auto Poised For Growth With Chetak 35 Launch And Production Cost Cuts, Say Analysts

Bajaj Auto has invested Rs 300 crore in its electric vehicle infrastructure and aims to increase production capacity for the Chetak model from 40,000 to 60,000 units per month.

<div class="paragraphs"><p>Bajaj Auto's Chetak 35, with a 45% lower production cost, has been a key contributor to the company's growing share in the electric two-wheeler market. Clockwise from left: Bajaj Auto Urbanite President Eric Vas, MD Rajiv Bajaj's son Rishabh Bajaj and Bajaj Auto Technology MD Abraham Joseph at the launch of the Bajaj Chetak 35 Series in Pune on Friday, Dec. 20, 2024. (Photographer: Tushar Deep Singh/NDTV Profit)</p></div>
Bajaj Auto's Chetak 35, with a 45% lower production cost, has been a key contributor to the company's growing share in the electric two-wheeler market. Clockwise from left: Bajaj Auto Urbanite President Eric Vas, MD Rajiv Bajaj's son Rishabh Bajaj and Bajaj Auto Technology MD Abraham Joseph at the launch of the Bajaj Chetak 35 Series in Pune on Friday, Dec. 20, 2024. (Photographer: Tushar Deep Singh/NDTV Profit)

The launch of Bajaj Chetak 35, powered by an approximate 45% lesser cost of production, bodes well for the parent, Bajaj Auto Ltd., according to brokerages Investec and InCred Equities.

The company has invested around Rs 300 crore in its electric vehicle infrastructure and the Chetak model, InCred said in a report, adding that Bajaj Auto plans to increase its production capacity from 40,000 to 60,000 units per month to keep up with demand. The scooter is also available on Amazon.

Over the last five years, Bajaj Auto has sold about 280,000 units of the Chetak, averaging 25,000 units per month in the domestic market. In the first 20 days of December 2024, the Chetak led the electric two-wheeler market, securing a 26.6% market share with 12,651 units sold, according to InCred.

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Electric two-wheelers make up 20% of the company's domestic revenue and have reached profitability. Bajaj Auto also plans to introduce the Chetak 35 Series in international markets within six months. InCred has maintained a 'hold' rating on the stock due to price corrections and easing valuation concerns.

Meanwhile, Investec has retained a 'buy' rating on the stock, taking into account multiple factors such as growth in the domestic market led by the CNG bike, electric two-wheelers, and Triumph Motorcycle. The company is also seeing a recovery in exports comparable to pre-Covid levels, coupled with growth in the electric two-wheeler portfolio.

The company’s market share in EVs has shot up from 12% in April 2024 to around 27% in year-to-date December 2024. The PLI benefit to the company should also bolster its profitability, according to Investec.

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Bajaj Auto stock rose as much as 1% to Rs 8,874.95 apiece on the NSE on Monday. The stock closed 0.21% lower at Rs 8,768.45 per share. This compares with a 0.70% advance in the benchmark Nifty 50. It has risen 35.64% in the last 12 months and 30.45% year-to-date.

Out of 37 analysts tracking the company, 20 maintain a 'buy' rating, 11 recommend a 'hold,' and 16 suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 27.3%.

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