Buy Bajaj Auto Ltd For Target Rs. 9,765 by Axis Securities
Recommendation Rationale
* International Market: Bajaj Auto posted a strong Q2 international performance, with exports up 24% YoY to 550,000+ units, its highest-ever quarterly export revenue. The company outpaced industry growth in its top 30 emerging markets, which collectively grew ~14% with Bajaj growing at 1.5x, gaining market share. LATAM posted its best-ever quarter, led by Colombia and Mexico, with Brazil crossing 8,000 units and turning profitable through localised manufacturing. Asia and Africa saw double-digit growth, led by Sri Lanka, the Philippines, and East Africa, while Nigeria remained stable despite macro challenges. The CV export segment grew 67% YoY, reflecting sustained product and channel development efforts. Management expects export momentum to continue, supported by improved market conditions, localised manufacturing, and regional recovery.
* 3W’s Portfolio: Bajaj Auto is well-positioned across ICE autos, e-autos, and e-rickshaws. The GST rate cut is expected to lift the ICE-auto segment from ~5% decline to slight growth, which is favourable given Bajaj’s ~80% market share and strong profitability in RE CNG. In E-autos, industry growth has moderated to ~50% YoY, but Bajaj expects to regain market leadership from Q3 as supply constraints ease, supported by a wider product portfolio than peers. Bajaj has entered the consolidating e-rickshaw segment and aims to capture a significant share. Management sees the 3W business as a profitable opportunity, with Bajaj’s brand, product range, and distribution supporting sustained leadership.
* Bajaj Auto Credit Limited: A Silent Value Compounder: BACL delivered Rs 132 Cr PAT in Q2FY26, a ~29% QoQ increase. AUM stands at Rs 14,000 Cr and penetration at ~40%. Bajaj infused Rs 500 Cr this quarter to support aggressive but profitable growth. This captive NBFC flywheel is increasingly accretive to core RoE and valuations.
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