Bajaj Auto Q4 beat: Should you buy, sell or hold the stock?

Bajaj Auto shares were trading lower today even after the two-wheeler maker reported stronger-than-expected Q4 earnings, resulting in a 9% beat on consensus EBITDA.

EBITDA margin improved 20bps QoQ to 19.3%, largely driven by higher spares and a better-than-expected export mix. "While we are concerned about Bajaj's market share loss in premium bikes and exports, we see multiple tailwinds — improving domestic demand, gradual export recovery, launch of Triumph bikes, and scale-up of EVs," Jefferies analyst Nitij Mangal said.

The global brokerage sees Bajaj's domestic volumes rising at a strong 23% CAGR over FY23-25E. While the stock was trading 0.66% lower at Rs 4,314, it has given 13% return in the last one month.

Here's what analysts said on Bajaj Auto's Q4 numbers:

Jefferies
We raise FY24-25 EPS by 4%, mainly factoring in higher ASP, and are 10-17% above Street. Expect strong 23% EPS CAGR over FY23-25E. Bajaj's 17x/14x FY24E/FY25E PE are reasonable and 4-5% dividend yield is attractive. Retain ‘buy’ with revised Rs5,100 PT (vs. Rs4,800).

Kotak Institutional Equities
We have increased our FY2024-25 EPS estimates by 4-5% on (1) higher ASPs and (2) EBITDA margin assumptions, partly offset by lower volume assumptions.

Post the recent rally, we believe most of the positives are already being factored in at CMP. Maintain ‘reduce’ rating on the stock with a revised FV of Rs4,000 (Rs3,625 earlier). We value the standalone business at 16.7X FY2024E EPS and ascribe Rs219 per share to stake in the KTM business.

ICICI Securities
We are increasing our FY24/25 EBITDA estimates by ~4% mainly driven by an increase in ASP estimates and a slight increase in EBITDAM by ~20-30bps. We retain ‘add’ on BJAUT with a revised DCF-based target price of Rs 4,563 (earlier Rs4,051), implying ~14.5x FY25E core earnings. Increase in target price is driven by a combination of increase in earnings estimates and rollover of earnings by a quarter in DCF.

HDFC Securities
At 17.6x FY25E, the stock appears expensive. Reiterate ‘reduce’ with revised target price of Rs 4,028 (earlier Rs 3,857); as we roll forward to FY25 earnings (from Sep 24 earlier)—core business valued at an unchanged 16x multiple.

JM Financial
Given the successful track record of product intervention by BJAUT in the last few years, we remain positive on the stock. We estimate revenue / EPS CAGR of c.14%/c.17% over FY23-25E. Maintain ‘buy’ with Mar’24 target price of Rs 4,600 (17x PE). Delay in new product launches and continued weakness in export markets are the key risks.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)