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Bajaj Auto Q2 Review: Systematix Sees 20% Upside As Chetak Profitability Improves; Check Revised Target Price

Bajaj Auto delivered a healthy operating beat, with Ebitda exceeding estimates despite gross margin contraction, however, net profit beat was relatively modest due to lower-than-expected other income, making operating performance the key positive for the quarter, adds the brokerage.

Bajaj Auto Q2 Review: Systematix Sees 20% Upside As Chetak Profitability Improves; Check Revised Target Price
Chetak's portfolio profitability has reached double digits, reflecting improving unit economics.
(Photo: Company website)
STOCKS IN THIS STORY
Bajaj Auto Ltd.
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Bajaj Auto Ltd.'s Q2 FY27 performance demonstrates the strength of its export franchise, premium motorcycle portfolio and three-wheeler leadership, while the EV business is progressing towards stronger profitability, says Systematix. Near-term earnings resilience has been supported by pricing, favorable currency realisations, operating leverage and PLI income despite unusually high input-cost inflation. Looking ahead, sustaining export momentum, converting capacity additions into higher volumes and reducing EV costs ahead of PLI expiry will be critical to sustaining earnings growth.

NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.

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According to Systematix, Bajaj Auto Ltd.'s Q2 FY27 performance demonstrates the strength of its export franchise, premium motorcycle portfolio and three-wheeler leadership, while the EV business is progressing towards stronger profitability.

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Near-term earnings resilience has been supported by pricing, favorable currency realisations, operating leverage and PLI income despite unusually high input-cost inflation.

Looking ahead, sustaining export momentum, converting capacity additions into higher volumes and reducing EV costs ahead of PLI expiry will be critical to sustaining earnings growth.

Post Q2 FY27 result, the brokerage broadly maintains its earnings estimate for FY27E/FY28E and retain Buy rating on the stock with target price of Rs 12,498 from earlier Rs 12,425.

A slight change in price target is attributed to change in valuation of its strategic investments in Bajaj Mobility AG.

Click on the attachment to read the full report:

Sysytematix Bajaj Auto.pdf
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