Buy Bajaj Auto; target of Rs 14,300: Anand Rathi

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Solid demand: Bajaj Auto's domestic and exports 2W segment are expected to benefit from GST relief and market expansion.
  • Aggressive EV strategy: The company's EV business is growing, with a double-digit EBITDA margin, and is expected to contribute significantly to revenue.
  • Margin expansion: Rising economies of scale, forex gains, and cost control are expected to drive margin expansion, despite input pressure.
  • Favourable model-mix: The company's focus on high-end motorcycles and select 3W sub-segments is expected to drive revenue growth.

Thesis Validation Checklist

  • Success of new launches: Monitor the success of new launches, including the Pulsar 125 and Pulsar 150, and their impact on revenue and market share.
  • EV growth: Track the growth of the EV business, including the expansion of the Chetak capacity and the introduction of new EV models.
  • Margin trends: Monitor margin trends, including the impact of commodity price inflation and forex gains.
  • Competition: Keep an eye on competition in the 2W and EV segments, including new entrants and existing players.

Investors should watch for these signals over the next 12 months to validate the investment thesis.