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This robust financial achievement signals Bajaj Auto's strong operational momentum, yet the company navigates a landscape where its market valuation is under scrutiny. The reported quarter demonstrates a significant step forward in revenue and profitability, underscoring recovery trends in key markets and the effectiveness of its strategic initiatives, even as the broader automotive sector witnesses broad-based expansion.
The Valuation Conundrum
Bajaj Auto declared record consolidated revenue of ₹16,204.45 crore in the third quarter of fiscal year 2025-26, marking the first time it crossed the ₹15,000 crore quarterly revenue milestone. Consolidated net profit surged 25% year-on-year to ₹2,749.82 crore. On a standalone basis, reported profit after tax was ₹2,502.81 crore, a 19% year-on-year increase, though this figure was slightly below some analyst estimates due to an exceptional item related to labour code adjustments. The company also reported its highest-ever EBITDA at ₹3,161 crore, up 22% year-on-year, with margins expanding to a robust 20.8%. As of January 2026, Bajaj Auto's market capitalization stood at approximately ₹2.68 lakh crore. Despite these strong figures, the stock trades at a premium. Jefferies noted the stock's valuation at 24 times FY27 earnings, exceeding its long-term average of 21x, prompting a 'Hold' rating and a target of ₹9,100 [cite: original text]. UBS maintained a 'Sell' rating with a target of ₹9,015, citing Bajaj Auto's motorcycle-heavy mix as a structural challenge [cite: original text]. Nomura views valuations around 20 times FY28 earnings as fair, reiterating a 'Neutral' stance with a target of ₹10,446 [cite: original text]. The stock closed January 30, 2026, at ₹9,584, reflecting a nuanced market reaction.
Demand Recovery and Margin Resilience
The company's performance was underpinned by strong volume growth and resilient margins, with exports showing a significant rebound. Two-wheeler sales grew 7% year-on-year in Q3 FY26 to 1.13 million units, while commercial vehicle volumes, largely three-wheelers, jumped 23% year-on-year to 208,869 units. Domestic sales saw a more muted growth of 3% year-on-year to 731,037 units, with domestic two-wheeler sales rising 2%. Exports were a key driver, with two-wheeler exports surging 14% year-on-year and commercial vehicle exports jumping 56%. The KTM + Triumph duo saw domestic volumes and revenue grow nearly 50% year-on-year, driven by an expanded portfolio. The electric vehicle segment also contributed, with electric scooters delivering strong growth and EVs accounting for approximately 25% of domestic revenue in Q3 FY26, according to UBS. The broader Indian automotive industry experienced a significant 17.6% year-on-year growth in domestic sales during Q3 FY26, with the two-wheeler segment rising 16.9% to a record 5.70 million units. Competitors like TVS Motor Company reported a surge in profit by 49% year-on-year to ₹841 crore and revenue growth of 34%, while Hero MotoCorp is expected to report a slight rise in profit despite stagnant volumes due to an improved product mix.
Brokerage Perspectives and Future Trajectory
Analyst sentiment remains divided, reflecting differing views on Bajaj Auto's growth prospects versus its current valuation. Goldman Sachs maintained a 'Buy' rating with a target of ₹11,500, suggesting approximately 20% upside and citing early signs of a domestic two-wheeler demand turnaround [cite: original text]. CLSA reiterated an 'Outperform' call with a target of ₹11,410, highlighting the 20.8% EBITDA margin and favourable currency tailwinds for exports [cite: original text]. Looking ahead, Bajaj Auto plans to launch eight new motorcycles in the next four to five months as part of a broader 15-model product plan for 2025-26, focusing on strengthening the Pulsar franchise in the 150cc-plus segment. This aggressive product strategy aims to regain market share and capitalize on the premiumization trend. The company also highlighted its robust balance sheet, with surplus funds of approximately ₹15,000 crore, even after dividend payouts and capital infusions.