Bajaj Auto shares took a sharp 8.39% dive to ₹10,642.40 on the BSE after the company’s September quarter (Q2) results came in below expectations. Although the company’s revenue grew by 22% YoY, it was slightly below market estimates, leading to the sell-off.
Key Highlights of Bajaj Auto’s Q2 Performance 🏍️📊
- Revenue Growth: Bajaj Auto’s revenue increased by 22% YoY, driven by strong volumes, but lower-than-expected realization per unit affected overall performance.
- Volume Growth: The company sold 12 lakh units in the quarter, marking a 16% growth. However, the net revenue per unit grew only by 5%, reaching ₹1,07,470 per unit, which lagged behind expectations.
- EBITDA & Margins:
- EBITDA rose 24% to ₹2,650 crore, though it was slightly below estimates due to the revenue miss.
- The EBITDA margin improved by 40 basis points YoY, hitting 20.2%.
- PAT Growth: Adjusted PAT climbed 22% YoY to ₹2,220 crore but fell short of market projections due to lower operating profit.
Market Reaction & Analyst Views 🧐📉
- Stock Performance: Despite the 8.39% dip, Bajaj Auto’s stock is still up by a massive 60% year-to-date, outperforming the Nifty Auto index over the past year.
- Valuation Concerns: Analysts, including MOFSL, believe the stock is now fairly valued, trading at 38.5x FY25E EPS and 30x FY26E EPS. They maintained a Neutral rating with a target price of ₹11,450.
- Downgrade: Emkay Global downgraded Bajaj Auto to a ‘Sell’ with a target price of ₹9,500, preferring Hero MotoCorp for better risk-reward and TVS Motor for improved growth prospects.
- Positive Outlook: Nuvama remains more optimistic, revising its target price to ₹13,200 from ₹12,000, citing long-term growth potential.
What to Watch Next 🔍🚀
- Future Growth: Bajaj Auto’s success in the electric two-wheeler (E2W) and electric three-wheeler (E3W) segments, along with its dominance in the CNG 2W market, could provide a strong growth trajectory. 📈
- Capacity Expansion: Investors will be keen to hear more from management on their plans for capacity expansion and their strategy for these emerging markets.
Despite the Q2 stumble, Bajaj Auto’s position in the market remains strong, especially as it eyes new opportunities in the CV segment and electric vehicle space.