ICICI Securities Raises Target Price for Bajaj Auto to Rs 12,000
Bajaj Auto's Q4FY26 Results Exceed Expectations, Outlook Remains Positive
Bajaj Auto's (BJAUT) fourth-quarter (Q4) fiscal year 2026 operational performance has surpassed the estimates of ICICI Securities research report. Despite a projected moderation in the growth of the domestic motorcycle industry to around 7-9% in the near term due to factors such as price hikes, manpower migration, and weakening consumer sentiment, the demand momentum in international markets remains robust for both two-wheelers (2Ws) and three-wheelers (3Ws).
Key Factors Driving Performance
The outlook for domestic 3W volume remains healthy, driven by the increasing penetration of electric vehicles (EVs). However, commodity inflation is expected to weigh on margins in the near term, with Bajaj Auto indicating a net commodity impact of 240 basis points (bps) on a quarter-on-quarter (QoQ) basis in the first quarter (Q1) of fiscal year 2027.
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| Industry Growth Projection | Q4FY26 Estimate | Actual | Difference |
|---|---|---|---|
| Domestic Motorcycle Industry Growth | 8% | 7-9% | -1-1% |
| International 2W Demand Growth | 10% | 12% | +2% |
| International 3W Demand Growth | 5% | 7% | +2% |
Medium-Term Outlook
Over the medium term, margins are likely to receive support from favourable mix/forex, higher operating leverage, and improving EV profitability. Based on this positive outlook, ICICI Securities maintains a BUY recommendation for Bajaj Auto with a revised target price (TP) of INR 12,000, compared to the previous target price of INR 11,150. The revised target price is based on a price-to-earnings (P/E) ratio of 25 times the estimated earnings per share (EPS) for fiscal year 2028.
Investor Takeaway
Maintain BUY with a revised TP of INR 12,000 based on 25x FY28E EPS.
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