Buy Bajaj Auto; target of Rs 12600: Motilal Oswal

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Domestic market share recovery: BJAUT's market share loss in the domestic segment is expected to reverse due to a strong product pipeline, including new Pulsar models and upgrades in the 160-400cc segment.
  • Scaling up EV business: BJAUT targets a leadership position in 2W EVs, with a focus on increasing Chetak's production capacity to 80k units per month and expanding its exclusive store network.
  • Robust export outlook: BJAUT aims to maintain monthly export volumes at ~250k units, driven by market share gains in Africa and Latin America, and entry into new product segments.
  • Margin resilience: Despite input cost inflation, BJAUT's margins are expected to remain stable, supported by calibrated price increases, cost optimization, and operating leverage.

Thesis Validation Checklist

  • Monitor domestic market share trends: Watch for signs of market share recovery in the domestic motorcycle market, driven by new launches and product upgrades.
  • Track EV business growth: Monitor the growth of BJAUT's EV business, including Chetak's production capacity and sales, as well as the expansion of its exclusive store network.
  • Export volume trends: Keep an eye on BJAUT's export volumes, particularly in Africa and Latin America, to gauge the company's ability to maintain its robust export outlook.
  • Margin performance: Closely watch BJAUT's margin performance, considering the impact of input cost inflation and the company's ability to maintain its pricing power and cost discipline.