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On Wednesday, Goldman Sachs updated its outlook on Bajaj Auto (NSE:BAJA) Ltd (BJAUT:IN), increasing the price target to INR10,800 from INR10,700 while reiterating a Buy rating on the stock. The adjustment follows Bajaj Auto’s third-quarter financial results, which aligned with market expectations. The company reported year-over-year growth of 6% in both revenue and EBITDA, although these figures fell short of Bloomberg consensus estimates by 2%.
Bajaj Auto’s management anticipates the domestic two-wheeler market to expand by 6% to 8%, with segments above 125cc expected to outpace the overall market growth. The firm also projects that its export volume, which constitutes 35% of its revenue, will persist in its upward trajectory, exceeding 20% growth. This optimism is buoyed by increasing demand in key international markets such as Nigeria, where quarterly sales have reached 100,000 units, as well as in Latin America and the ASEAN region.
Additionally, Bajaj Auto Credit Limited has seen significant growth, amassing an Assets Under Management (AUM) of Rs70 billion, and reported a Profit After Tax (PAT) of Rs520 million for the third quarter of the fiscal year 2025. Despite these positive developments, Bajaj Auto faced challenges during the quarter due to the ongoing restructuring at KTM, which had a negative impact of approximately 6% on the company’s revenue and EBITDA growth.
Looking ahead, the company is preparing for the On-Board Diagnostics (OBD) 2b transition, which is expected to result in a cost increase of around 1% per motorcycle unit. Bajaj Auto plans to begin dispatching units that comply with the new regulations in February 2025. The company’s forward-looking statements and strategic initiatives indicate a commitment to maintaining its growth momentum in both domestic and international markets.
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