Motilal Oswal Financial Services has maintained a neutral rating on Bajaj Auto, citing ongoing challenges in the domestic motorcycle segment despite the company’s strong performance in exports and electric vehicles (EVs).
In its latest report, the brokerage assigned a target price of Rs 9,070 per share, implying a modest upside of about 1% from current levels. According to Motilal Oswal, Bajaj Auto’s valuation appears fair at present, and a sustained recovery in the domestic market will be crucial for any meaningful upside in the stock.
Domestic Market Recovery Remains a Key Concern
While Bajaj Auto continues to perform well in exports and is gaining traction in the EV space, its domestic motorcycle market share remains under pressure. Motilal Oswal noted that the company is taking steps to regain lost ground through new product launches and operational restructuring, but the pace of recovery will be closely watched by investors.
Growth Outlook and Valuation
Motilal Oswal expects Bajaj Auto to deliver a 12% compound annual growth rate (CAGR) in revenue and EBITDA, and an 11% CAGR in profit after tax (PAT) between FY25 and FY27. However, at the current valuation of around 24.1x FY27E EPS and 21.9x FY28E EPS, the brokerage believes much of the near-term growth potential is already priced in.
“At these valuation levels, Bajaj Auto appears fairly valued,” Motilal Oswal said, reiterating its neutral stance on the stock.
Key Triggers to Watch
The brokerage highlighted several triggers that could influence the stock’s performance going forward, including:
- Recovery in domestic motorcycle demand and market share
- Success of new product launches
- Sustained growth in exports
- Scaling up of the electric vehicle portfolio
Until clearer signs of domestic recovery emerge, Motilal Oswal believes Bajaj Auto is likely to trade within a narrow range, making it a hold rather than an aggressive buy at current levels.