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Bajaj Auto Ltd - Bernstein Summary

Rating and Price Target

• Rating: Outperform
• Price Target: INR 11,000
• Upside: 24% from close price of INR 8,874.50

Key Highlights

• Q4 Performance: Bajaj Auto sustained margins at 20.2% despite headwinds from KTM export suspension, domestic volume softness, and rising EV mix. Export growth accelerated by 19% YoY, with strong performance in LATAM and Brazil.
• FY26 Outlook: Expected 5-6% 2W industry growth driven by 125cc+ segment; 15-20% export growth; KTM acquisition approvals anticipated by mid-CY25.
• EV Business: Revenue from EVs (E-2Ws + E-3Ws) exceeded INR 55bn in FY25; Bajaj is India's largest E-2W/3W player.

Strategic Focus for FY26

• Sustain leadership in electric vehicles and enhance market share in 125cc+ motorcycles.
• Aggressively expand in Brazil and LATAM markets, including capacity upgrades.
• Launch new product variants (e.g., Pulsar models, "GoGo" E-3W brand, e-rickshaw).
• Revitalize KTM operations starting CY26, with synergies in manufacturing and procurement.

Financials and Valuation

• Q4 EBITDA margin held steady at over 20%, supported by USD depreciation and stable commodity prices.
• Projected FY26 EBITDA margin pressure due to currency and commodity costs, with calibrated price hikes offsetting part of the impact.
• Investment implications: Maintain Outperform rating; upside from EV segment growth and strategic initiatives.

Catalysts and Risks

• Catalysts: KTM acquisition completion, EV production scaling up, sustained international demand.
• Risks: Weaker margins from currency/fuel price volatility; continued export market weakness; rural demand fluctuations.