Accumulate Bajaj Auto; target of Rs 11,700: Prabhudas Lilladher

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Bajaj Auto's strong Q2FY27 results were driven by a richer mix of commercial vehicles, premium motorcycles, exports, and electric vehicles, along with calibrated pricing and favorable currency movements.
  • The company expects the 2W industry to grow in double-digits YoY in Sep-Dec'26, albeit at a slower pace than the 18% seen in Apr-Aug'26.
  • Bajaj Auto aims to grow its share in the strategic 125cc+ segment, while being willing to trade off market share in the entry segment motorcycles that offer lower profitability.
  • The EV portfolio is margin accretive to the domestic business, aided by PLI benefits, and the company plans to increase Chetak capacity and establish 1,000 Chetak exclusive stores within the next 12 months.

Thesis Validation Checklist

  • Investors should watch for Bajaj Auto's ability to sustain margins despite raw material inflation and supply chain constraints.
  • The company's progress in increasing Chetak capacity and establishing exclusive stores will be crucial in driving EV growth.
  • The 2W industry's growth rate and Bajaj Auto's market share in the 125cc+ segment will be key indicators of the company's success in executing its strategy.
  • Any changes in government policies, such as the PLI scheme, could impact Bajaj Auto's profitability and growth prospects.