Bajaj Auto Maintains Neutral Rating, Targets Rs 9965: Motilal Oswal Research

Bajaj Auto's 4QFY26 Earnings Reflect Adverse Macro Environment

Bajaj Auto's (BJAUT) fourth-quarter earnings for the fiscal year 2026 (4QFY26) came in at INR27.2 billion, aligning with the research firm Motilal Oswal's estimate. Favorable currency fluctuations, price hikes, and an improved product mix helped offset rising cost headwinds and maintained the company's quarterly margins at 20.8%, which was in line with expectations.

Despite its ability to post healthy performance in the face of adverse macroeconomic conditions, Bajaj Auto faces multiple headwinds to navigate in the coming quarters. Export demand remains robust, although the outlook remains uncertain due to ongoing geopolitical issues. In the domestic market, while Bajaj Auto is poised to outperform the motorcycle industry thanks to its recent product launches, growth is expected to moderate in the fiscal year 2027 (FY27E).

Furthermore, a sharp surge in input costs is likely to limit any potential upside to the company's margins. Motilal Oswal forecasts Bajaj Auto to post compound annual growth rates (CAGR) of 15%/15%/14% in revenue/EBITDA/Profit After Tax (PAT) over the fiscal years 2026-2028 (FY26-28E).

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At a price-to-earnings ratio of 25.4x/22.2x for the fiscal years 2027E/FY28E earnings per share (EPS), Bajaj Auto's stock appears fairly valued. Based on this assessment, Motilal Oswal maintains a Neutral rating for the stock, with a target price of INR9,965, derived from a multiple of 22x for the fiscal year 2028 (FY28E) core EPS.