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HDFC Securities Institutional Equities
Bajaj Auto Ltd.'s Q4 profit after tax at Rs 19.4 billion was ahead of our estimate of Rs 17.7 billion, driven by soft commodity prices and a better mix in the export markets. While Bajaj Auto has posted a healthy performance in FY24, it is unlikely to sustain it, as-
exports will take longer to revive in key markets of Africa and Latin America since they remain stressed due to inflation and fears linger due to current Red Sea crisis;
we expect growth rates in domestic motorcycles (and in three-wheelers) to normalise in coming quarters on a high base and due to lack of adequate rainfall in FY24;
in two-wheeler electric vehicles, Bajaj Auto is facing intense competitive pressure and uncertainty exists due to the upcoming general elections;
higher ad spending is expected due to the upcoming launches under the Pulsar brand.
Given its outperformance in FY24, we raise estimates for FY25-26E marginally by 2% each.
Maintain Sell with a revised target price of Rs 5,732 (earlier Rs 5,606), based on SOTP valuation on FY26 earnings.
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