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Investing.com -- Shares of Bajaj Auto (NSE:BAJA) faced a series of downgrades following its March quarter results, as analysts flagged near-term margin pressure despite strong export momentum and a solid electric vehicle presence.
Macquarie downgraded the stock to “neutral” from “outperform” and cut its target price by 14% to 8,811 indian rupees, citing rising input costs, rupee appreciation, and increased marketing spends.
DAM Capital lowered its rating to “sell” with a target of 7,650 rupees, while ICICI Securities cut it to “Add” with a revised target of 9,900 rupees.
Morgan Stanley (NYSE:MS) also moved to “equal-weight” from “overweight” and slightly reduced its price target to 9,117 rupees from 9,128 rupees.
It said Bajaj Auto’s FY27 estimated EV/EBITDA multiple of 18x, already a 10% discount to TVS Motor, looks fair given ongoing domestic share losses and capped margin potential. Bajaj, TVS, and Eicher trade at 24x, 33x, and 27x FY27 P/E, respectively.
For the March quarter, Bajaj Auto reported standalone EBITDA of 24.5 billion rupees, up 6% year-on-year and 3% ahead of Macquarie estimates.
EBITDA margin was 20.2%, in line with expectations, while net profit rose 6% to 20.5 billion rupees. Realizations rose 5% quarter-on-quarter due to a favorable product mix.
However, analysts pointed to a 100-basis-point increase in input costs, with only partial offset through price hikes.
Export margins may also face pressure from currency appreciation, while year-on-year increases in advertising and product costs are expected to stay elevated.
Despite this, exports remain a key strength. Management projects 15–20% year-on-year growth, supported by rising demand in Latin America.
Brazil sales in Q4 reached 7,000 units, more than the full year FY24 total, and capacity is set to expand to 50,000 units annually by CY25.
In EVs, Bajaj posted over 5.5 billion rupees in FY25 revenue, retaining leadership in electric two-wheelers and becoming the top player in electric three-wheelers in April 2025. A mass-market electric rickshaw targeting 40,000 units monthly is expected in July.
Morgan Stanley flagged KTM’s potential turnaround as a key upside risk. Bajaj holds a 75% stake, and stronger performance at the brand could lift high-margin export earnings and contribute 3–5% to standalone profits. However, continued domestic market share erosion remains a significant downside risk.