Broadcom named strategic vendor for Walmart virtualization solutions
On Friday, JPMorgan downgraded Bajaj Auto (NSE:BAJA) Ltd (BJAUT:IN) stock from Overweight to Neutral and reduced the price target to INR9,255.00 from the previous INR9,780.00. The downgrade is attributed to the stock’s valuation re-rating to 25-30x P/E, which is above the 10-year average of 19-20x. This re-rating has been driven by several factors, including market-share gains in the domestic internal combustion engine (ICE) two-wheeler (2W) segment, a sharp increase in electric vehicle (EV) sales (both 2W and 3W), and a revival in export markets.
However, Bajaj Auto has seen its performance dip within the slowing two-wheeler market over the past six months, despite robust EV sales. Additionally, export growth has begun to moderate. JPMorgan’s analysis suggests that domestic motorcycle industry growth could remain under 5%, with competitive intensity potentially impacting Bajaj Auto’s volumes.
In light of these observations, JPMorgan has revised its volume forecasts for Bajaj Auto for fiscal years 2026 and 2027, reducing them by 4-5%. This adjustment has led to cuts in earnings per share (EPS) estimates by 6-8%. The new price target is based on a 24x FY27E P/E multiple and suggests limited upside potential for the stock, prompting the downgrade to a Neutral rating.
JPMorgan also highlighted several key factors to watch that could affect Bajaj Auto’s stock performance. These include domestic two-wheeler retail market-share, the launch of a new entry-level 125cc motorcycle and an E-rickshaw, as well as the trend in export growth, with management previously guiding for a 15-20% increase. The firm’s outlook reflects a cautious stance on the company’s near-term prospects amid a challenging market environment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.