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The company's fourth-quarter performance saw earnings reach INR 27.2 billion, aligning with analyst forecasts, and operating margins held steady at 20.8%. These results were achieved through a combination of favorable currency movements and strategic price adjustments, which helped absorb rising raw material costs and were complemented by a more profitable product mix. While the immediate market reaction saw Bajaj Auto's stock trade within a narrow band, investors are now digesting the balance between this steady operational execution and the anticipated challenges ahead.
Bajaj Auto's valuation relative to its peers is a point of focus. Its projected Price-to-Earnings ratio for FY27, estimated around 30-31 times, positions it at a premium compared to Hero MotoCorp, which trades at approximately 25 times its forward earnings, and TVS Motor, which often commands higher multiples. This premium valuation for Bajaj Auto is partly based on its strong export performance and premium product offerings. Meanwhile, the broader Indian motorcycle market is forecast to grow at a more measured pace of 5-7% in FY27.
Historically, Bajaj Auto's shares have reacted cautiously to earnings reports that highlight increasing input costs or uncertain export demand, often leading to sideways price action or mild corrections rather than immediate rallies. The wider Indian automotive sector, particularly the two-wheeler segment, continues to face challenges related to rural demand and affordability. Despite these broader issues, the premium motorcycle segment has shown resilience.
The company's significant reliance on export markets introduces inherent volatility. Ongoing geopolitical instability presents a material risk that could disrupt supply chains and reduce international sales volumes. Domestically, the anticipated moderation in growth for fiscal year 2027, even with new product launches, suggests that achieving market share gains may become more difficult. Furthermore, the projected rise in input costs poses a direct threat to margin expansion, potentially reversing gains from currency fluctuations and pricing power. Bajaj Auto's financial structure and exposure to volatile commodity prices may present a less robust risk profile compared to some competitors.
Looking ahead, Motilal Oswal forecasts Bajaj Auto to achieve a compound annual growth rate of 15% in revenue, 15% in EBITDA, and 14% in profit after tax between fiscal years 2026 and 2028. The brokerage reiterates a Neutral rating with a price target of INR 9,965, based on a 22x multiple of its estimated fiscal year 2028 core earnings per share. This target reflects current earnings performance while factoring in anticipated market headwinds and moderating growth.