Bajaj Auto: Target Price Revised to Rs 10,400 by Prabhudas Lilladher

Bajaj Auto Downgraded to 'HOLD' Following Price Run-Up and Disruptions

Prabhudas Lilladher's latest research report on Bajaj Auto has resulted in a downgrade of the stock to 'HOLD' from 'Accumulate'. This decision comes in the wake of a significant price increase following the company's buyback announcement and disruptions caused by the West Asia conflict.

The company's Q4FY26 standalone revenue stood at INR160.1 billion, marking a year-over-year increase of 31.8% and a quarter-over-quarter growth of 5.2%. This performance was in line with the brokerage's expectations, with a 1.7% margin above the BBGe (met PLe). The expansion in margins was primarily driven by favorable foreign exchange rates, a favorable product mix, and operating leverage, which more than offset increased raw material costs, higher discretionary expenses, and the withdrawal of the PM E-Drive (e3Ws) incentive.

Despite the positive outlook, Bajaj Auto's 75-125cc domestic motorcycle segment, which accounts for approximately 53% of its overall two-wheeler volumes for FY26, has been witnessing a decline in market share. However, the company is expected to outperform the industry growth, driven by sustained gains in market share in 150cc+ motorcycles, electric vehicles (EVs), and exports.

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Revenue and EBITDA Growth Projections

The research report forecasts a revenue/EBITDA/EPS compound annual growth rate (CAGR) of 13.5%/13.9%/13.3% over the FY26-28E period. As a result, the target price for Bajaj Auto has been revised to INR10,400 (previously INR10,000), valuing the company at 23x (previously 22x) P/E on its FY28 standalone earnings per share (EPS).