Target: ₹11,100
CMP: ₹9,664.15
We upgrade Bajaj Auto from Add to Buy and extend our TP to December 2027E, increasing it by about 17 percent to ₹11,100 (from ₹9,500). This implies an upside of around 17 per cent (+2.7 per cent dividend yield in December 2027E) due to EPS hike in FY27E/28E of around 4/9 per cent and inclusion of Bajaj Auto Credit at ₹300/share, basis 2x FY28E P/E, given the significant increase in operations (H1FY26 PAT at ₹230 Crore vs ₹60 Crore per year). FY25).
We believe Bajaj Auto offers an attractive risk-reward at current levels (1YF at 24x vs. 38x/32x for TVSL/EIM), supported by strong export trends coupled with the launch of an updated Pulsar range in CY26, resulting in a healthy EPS CAGR of 14 per cent over FY26E-28E. Bajaj Auto’s total domestic 2W market share has bottomed out and increased marginally driven by market share of both premium motorcycles and e-scooters in Q3 FY2020.
Export momentum remains strong, led by Latin America/Asia, which coupled with currency depreciation tailwinds should support overall margin performance given the strong export volume mix (around 44 percent mix in FY26YTD versus 39 percent in FY25YTD).
Bajaj Auto’s e3W portfolio has also expanded significantly, overtaking M&M to become the top performer in e3Ws (around 31.8 per cent market share in Dec 2025 as against 31.9 per cent in FY25), while it maintained its second position in e2Ws over the last four months, with EBITDA breakeven already achieved. Furthermore, a gradual turnaround in KTM offers an additional upside potential of ₹2,000 crore.
Published on January 6, 2026