Bajaj Auto Q4 Results: The bull Vs bear case

The street is divided on the prospects of Bajaj Auto despite the two-wheeler maker reporting strong earnings and operating margin being at a nine-quarter high.

Bajaj Auto also declared a dividend of Rs 140 per share. The company had surplus cash of Rs 17,445 crore as of March 31, 2023.

Sales for Bajaj Auto in financial year 2023 were at a record high. The company said that sustained momentum on the domestic front led to strong double-digit revenue growth.

While only 7 percent of the 51 analysts who track Bajaj Auto have a sell rating, 58 percent of those have a buy recommendation.

has downgraded Bajaj Auto to outperform from buy, but has raised its price target on the stock to Rs 4,659. The firm has raised net profit estimates by 6-8 percent on higher Average Selling Price and revenue assumptions. However, it expects modest growth in two-wheeler exports in financial year 2024.

Morgan Stanley though, is overweight on the stock and has also raised its price target to Rs 5,063 from Rs 4,486 earlier. Industry recovery, Triumph deal, and a 4 percent dividend yield keeps the brokerage overweight on the stock. It has also raised Bajaj Auto's Earnings per Share (EPS) estimate by 8 percent for financial year 2024 and by 12 percent for financial year 2025.

A recovery in Bajaj Auto's exports can take longer than anticipated, according to Goldman Sachs, who is neutral on Bajaj Auto with a price target of Rs 4,500. It expects favourable momentum to continue in the 125 CC+ category in the domestic two-wheeler market.

Citi, however, is among the few brokerages who have a sell rating on Bajaj Auto with a price target of Rs 4,000. It said that unavailability of US Dollars in Bajaj Auto's export markets remains a key concern, and while demand may be nearing a bottom, the timeline for a sustained volume recovery remains unclear. While Citi has cut volume estimates \for Bajaj Auto over financial year 2024-2025, but has increased margin and ASP estimates for the same period.

Jefferies is the other bull on Bajaj Auto, maintaining a buy rating and also raising its price target to Rs 5,100 from Rs 4,800 earlier. It has also raised its financial year 2024-2025 EPS estimates by 4-5 percent.

The three catalysts for Bajaj Auto's growth are the Chetak EV Ramp-up, Triumph launch and recovery in exports, according to Motilal Oswal. The brokerage is neutral on the stock with a price target of Rs 4,400.

Shares of Bajaj Auto are trading 0.6 percent lower at Rs 4,319. The stock has been trading close to its 52-week high and has gained 21 percent so far this year.

Reliance Securities' Head-Research, Mitul Shah, recently downgraded the stock of a company to a 'hold' recommendation. In a conversation with CNBC-TV18.

Shah stated that while the market has priced in positive news, the upside would be limited, and there is a possibility of further negative surprises on the export front. The state is expecting recovery or a strong bounce back from July onwards, which the company's management had highlighted earlier.

“We believe that entire FY24 would remain under pressure and export growth would be just single digit, probably just 5-6 percent growth and which will be 20 percent below the peak level recorded by the company for export in FY19,” Shah said.