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Est. Vs. Actual for Q4FY25: Revenue – BEAT; EBITDA – BEAT; PAT – BEAT

Change in Estimates post Q4FY25

FY26E/FY27E: Revenue: -4.0%/-4.0%; EBITDA: -4.1%/-4,1%; PAT :-3.8%/-3.8%

Recommendation Rationale

Outperformance in Exports Market: Bajaj Auto reported strong export growth of 19% YoY in Q4FY25, with Latin America contributing over 30% of export volumes and 65%+ of the mix coming from premium brands like Pulsar and Dominar. Brazil recorded ~7,000 units sold in Q4—surpassing FY24’s full-year sales—prompting a ramp-up in local plant capacity from 20K to 30K units, with a target of 50K by Dec’25. Africa and Asia markets remained stable, while KTM exports from India are set to resume next quarter following the revival of KTM Austria. Management guides for 15–20% QoQ export growth in FY26, supported by strong demand, market recovery, and product mix improvement.

EVs Gaining Momentum:  The e3W industry grew ~60% YoY in FY25, and Bajaj’s market share increased from 17% to 33%. Post the introduction of the GoGo brand, the e3W business now contributes 20% of commercial vehicle revenue. In e2Ws, Chetak witnessed market share rising from 13% to 25% YoY, driven by the successful launch of the 35 Series in Dec’24. The e2W network stands at 310 Chetak Experience Centres and 3000+ sales points. Further product line expansion is planned for FY26 to capture new sub-segments. (The Co ighlighted supply issues related to rare earth metals from China if not resolved, there could be concerns from Jul’25 onward).

Sector Outlook: Positive

Company Outlook & Guidance: In FY26, the management’s focus is on gaining leadership in the 125cc+ motorcycle segment, expanding exports—especially in Latin America—and scaling key platforms like Chetak, GoGo, and Freedom. Expanding operations in Brazil, reviving KTM, boosting spares performance, and growing KTM and Triumph in India remain key priorities. The company also aims to balance growth with profitability amid ongoing market volatility.

Current Valuation: 24x P/E on core Mar’27E EPS (earlier 23x) plus PMAG stake and cash reserves at 1x book value.

Current TP: Rs 9,890/share; ( Earlier TP : Rs 9,380/share)

Recommendation: We maintain our BUY rating on the stock.

Financial Performance: Bajaj's Q4FY25 beat our estimates on all fronts. Total revenue grew \~5.8% YoY (down 5.1% QoQ), driven primarily by \~3.2% YoY growth (down 9.9% QoQ) in volumes and better ASP due to higher exports and an improved CV mix. EBITDA increased ~6.3% YoY (down 5% QoQ) and EBITDA margins remained steady at 20.2%, supported by cost reduction initiatives and lower personnel costs. PAT rose 5.9% YoY (down 2.8% QoQ).

Outlook: We model a 10%/11% CAGR for EBITDA/PAT over FY25–27E, driven by expectations of a recovery in exports and growth in EVs. EBITDA margins are expected to remain in the range of 20% for FY25–27E. Key risks include volatility in commodity costs and currency fluctuations

Valuation & Recommendation: The focus on expanding the premium MC, E2W, and E3W portfolio, along with leveraging new product launches and the gradual recovery in exports, is expected to provide sufficient operational levers to sustain margins despite rising input costs. We value the stock at a sustainable PE multiple of 24x its Mar'27E core EPS (previously 23x Mar'27), adding the company’s stake in PMAG and surplus cash reserves at 1x book value to arrive at a TP of Rs 9,890/share (previously Rs 9,380/share). The TP implies an 11% upside from the CMP. We maintain a BUY on the stock from a long-term perspective.

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