Bajaj Auto shares rose 2 per cent on January 9 after brokerage firm CLSA upgraded it to an ‘outperform’ rating from the previous ‘underperform’ rating. The upgrade stems from the growth prospects of Bajaj Auto’s electric two-wheeler business as well as the recent correction in the stock.
CLSA has set a target price of Rs 9,493 for the stock, indicating a potential upside of about 10 per cent from Wednesday’s close price. At 11.02 am, Bajaj Auto shares were trading at Rs 8,786.25 on the NSE. The stock was also among the top three gainers on the Nifty 50 index.
The stock has declined 32 per cent in the last four months and is currently trading at 21 times its expected FY27 earnings, slightly higher than its long-term average of 19 times.
In December, Bajaj Auto’s market share in the e-2W segment crossed 25 per cent, boosted by the launch of the more affordable Chetak variant. The brokerage highlighted the company’s ability to maintain 20 per cent margins while scaling up e-2W operations, calling it a significant achievement.
While Bajaj Auto has remained strong in the premium segment, CLSA believes the company will face increasing competition in the executive segment from its rivals.
Meanwhile, Jefferies has cut its price target for Bajaj Auto by nearly 23 per cent to Rs 10,350. The firm expects overall two-wheeler volumes to grow at 13-15 per cent CAGR (compound annual growth rate) during FY25-27.
