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Motilal Oswal Report
While the auto major Bajaj Auto Ltd. has been able to post healthy performance in this adverse macro thus far, there are multiple headwinds to navigate, highlights Motilal Oswal.
Export demand remains healthy, though the outlook remains uncertain, given the geopolitical issues. Even in the domestic market, while Bajaj Auto is likely to outperform the motorcycle industry on the back of its new launches, growth is likely to moderate in FY27E.
Further, a sharp surge in input costs is likely to limit margin upside. Overall, the brokerage factors in Bajaj Auto to post 15%/15%/14% CAGR in revenue/Ebitda/PAT over FY26-28E.
At 25.4x/22.2x FY27E/FY28E earnings per share, the stock appears fairly valued.
Motilal Oswal reiterates a Neutral rating with a target price of Rs 9,965, based on 22x FY28E core EPS.
Bajaj Auto Q4 Results
- Bajaj Auto's Q4 FY26 revenues came in line with brokerage's estimates, growing 31.8% YoY to Rs 16,010 crore.
- Volumes were up 24.3% YoY to ~1.4m units and realizations were up 6% YoY to ~Rs 1,17,000 units. An improved product mix, favorable currency movement, and record volumes drove growth across all businesses.
- Ebitda margins grew 60bp YoY to 20.8% (flat QoQ), in line with brokerage's estimates. Margins were stable QoQ despite input cost inflation, as led by an improved mix, price hikes, and favorable currency.
- Ebitda also grew 35.6% YoY to Rs 3,320 crore.
- PAT for the year was up 32.6% YoY to Rs 2,720 crore, in line with brokerage's estimates.
- For full year FY26, Revenue/Ebitda/PAT grew by 17.4%/19%/18.3% to Rs 58,700 crore/Rs 12,000 crore/Rs 9,830 crore, respectively.
- CFO for FY26 stood at Rs 8,960 crore, and free cash flow was at Rs 8,540 crore. RoE and RoCE for FY26 stood at 29.3% and 28.1%, respectively.
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