Whalesbook
Bajaj Auto's Strategic Push: A Path to Market Revival?
Bajaj Auto management recently met with analysts from Motilal Oswal, leading to a maintained 'Neutral' rating and a target price of ₹9,070 for the company's stock. While management expressed strong confidence in upcoming product launches aimed at reclaiming lost domestic motorcycle market share and detailed ambitious plans to secure leadership in the electric vehicle (EV) segment, the brokerage firm remains cautious. Key concerns highlighted include the ongoing erosion of market share in domestic motorcycles, particularly within the more profitable 125cc and above segments, and the critical need for a successful turnaround of its KTM operations.
Addressing Motorcycle Market Share Decline
A significant concern for Bajaj Auto has been its shrinking presence in the domestic motorcycle market. However, the company's management has articulated a robust strategy to counter this trend. The roadmap includes the launch of a new 125cc commuter motorcycle targeted for the Financial Year 2027. Furthermore, three new variants under the popular Pulsar brand are slated for release between December 2025 and May 2026. Bajaj Auto also plans strategic interventions for its Dominar brand and will introduce a 350cc variant from Triumph. Recently launched KTM models, such as the Adventure, Super Moto, and Duke 160, are also expected to contribute positively to sales volumes. Based on these initiatives, Motilal Oswal projects a healthy 6.5 per cent volume compound annual growth rate (CAGR) for Bajaj Auto over the Financial Year 2025 to Financial Year 2027 estimate period.
Export Momentum and Margin Support
Bajaj Auto has achieved a significant milestone in its export business, recently surpassing 200,000 units per month, a feat not seen in over three years. This recovery is noteworthy, especially considering that the crucial Nigerian market is operating at less than half its peak capacity. Latin America has emerged as the primary growth driver for exports, with management expressing optimism about the ramp-up in Brazil and Mexico, which are expected to sustain this positive momentum. Additionally, recent currency depreciations in key export markets are anticipated to provide a beneficial margin cushion in the upcoming quarters.
Ambitions in the Electric Vehicle Space
In the rapidly evolving electric vehicle (EV) sector, Bajaj Auto is positioning itself for leadership. The company has already secured the position of the second-largest player in the two-wheeler EV market, largely due to the strong demand for its Chetak scooter. An upcoming Chetak launch next year is expected to further propel Bajaj Auto towards a leading position in this segment. Significantly, Bajaj Auto is on the verge of achieving Earnings Before Interest, Tax, Depreciation, and Amortisation (Ebitda) break-even in its two-wheeler EV operations by the second quarter. In the three-wheeler EV segment, the recently introduced electric rickshaw, 'Riki', is poised to drive growth in the near future.
Post-KTM Acquisition Strategy
Following its acquisition of a controlling stake in KTM, Bajaj Auto's management indicated that the first half of the calendar year 2026 will be dedicated to consolidating and restructuring KTM's core operations. The strategy focuses on unlocking synergy benefits across manufacturing, the supply chain, and distribution networks. Bajaj Auto plans to divest non-core businesses, including bicycles, cars, and other smaller brands, to concentrate on the KTM and Husqvarna brands. Operational advantages stemming from these strategic realignments are expected to become evident from the second half of calendar year 2026 onwards, according to Motilal Oswal.
Impact
This news could positively influence Bajaj Auto's stock performance if its new product launches and EV strategy gain market traction. The focus on regaining market share and achieving EV leadership is crucial for long-term growth. Investors will be closely watching the execution of these plans and the impact on financial results. The 'Neutral' rating suggests that current market expectations are largely priced in, with future upside dependent on successful strategic execution.
Impact Rating: 7/10
Difficult Terms Explained
- Ebitda: Stands for Earnings Before Interest, Tax, Depreciation, and Amortisation. It is a measure of a company's operating performance.
- CAGR: Compound Annual Growth Rate. It represents the average annual growth rate of an investment over a specified period of time, longer than one year.
- Synergy: The concept that the combined value and performance of two companies will be greater than the sum of the individual parts.
- H1CY26 / H2CY26: Refers to the first half (January-June) and second half (July-December) of the calendar year 2026.
- FY27 / FY25-27E: Refers to the financial year 2027 and the estimated period of financial years 2025 to 2027.