Bajaj Auto: Fairly Valued? Motilal Oswal Issues Neutral Rating Amid Mixed Performance!

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Updated on 12 Nov 2025, 03:37 pm

Motilal Oswal's research report on Bajaj Auto Limited for the second quarter of the fiscal year 2026 (2QFY26) indicates that the company's earnings of INR 24.8 billion were largely in line with their estimates. Margins performed better than expected, reaching 20.5%, driven by a more favorable product mix and positive currency movements. However, lower 'other income' limited the overall earnings growth.

Key positives highlighted include a recovery in export volumes and a healthy ramp-up in sales for their Chetak electric scooter and three-wheeler (3W) segments. Despite these strengths, a significant concern raised is the loss of market share in the domestic motorcycle segment, particularly in the crucial 125cc and above category.

The report also notes Bajaj Auto's acquisition of a controlling stake in KTM, a strategic move whose success hinges on the swift turnaround of KTM's operations.

Valuation: At approximately 25.7 times earnings for FY26 estimates (FY26E) and 23.5 times for FY27 estimates (FY27E), Bajaj Auto appears to be fairly valued by the market.

Outlook: The company's ability to manage its market share and integrate its KTM acquisition will be critical monitorables moving forward.

Impact: This news has a moderate impact on investor sentiment and stock performance. Analyst reports can influence trading decisions, but Bajaj Auto's diversified business and strong brand presence often cushion short-term fluctuations. The focus on market share and strategic integration suggests potential future growth drivers or risks. Rating: 5/10

Difficult Terms Explained: • FY26/FY27E EPS: Earnings Per Share (EPS) projected for the Financial Year 2026 and 2027. EPS is a company's profit divided by its outstanding shares, indicating profitability per share. • Margins: The ratio of profit to revenue, indicating how efficiently a company converts sales into profits. • Favorable Currency: When the company's home currency weakens against foreign currencies, exports become cheaper for foreign buyers, and imports cost less for the company, boosting profits. • Other Income: Income generated from sources other than the company's primary business operations, such as interest income or gains from investments. • Ramp-up: The process of increasing production or sales volume for a new product or service. • Monitorable: Factors or events that investors should closely watch to assess future performance or risks.