Nuvama maintains 'Buy' on Bajaj Auto, citing strong export demand, product pipeline

Nuvama Institutional Equities has reiterated its 'BUY' rating on Bajaj Auto Ltd but kept its target price unchanged at Rs 10,700. The domestic brokerage remains optimistic about the company's growth trajectory, underpinned by strong export momentum, product pipeline and financial performance.

In its latest report, Nuvama said the company posted a 6 per cent year-on-year (YoY) increase in both revenue and EBITDA for the fourth quarter (Q4 FY25), reaching Rs 12,150 crore and Rs 2,450 crore, respectively, in line with its estimates.

Nuvama highlighted a healthy lineup of new products, including an affordable electric two-wheeler (E-2W), an entry-level 125cc motorcycle, an electric rickshaw, and a new E-2W model. These upcoming launches are expected to support volume growth in the near term. The brokerage estimates a 7 per cent compounded annual growth rate (CAGR) in volumes over FY25–27, with domestic sales projected to grow by 5 per cent and exports by 10 per cent.

Bajaj Auto has announced plans to enter the e-rickshaw segment in July 2025, targeting an addressable market of 40,000 units per month.

"Exports are set to register robust growth, driven by strong demand in the Latin American market, a recovery in KTM sales, and the reopening of the Sri Lankan market," the company also said.

Nuvama is factoring in revenue and EBITDA CAGR of 11 per cent each for FY25–27, supported by an expected average return on equity (RoE) of around 28 per cent. The firm also projects a 10 per cent CAGR in three-wheeler (3W) exports, including quadricycles, attributing the growth to improving demand across Latin America and ASEAN regions, coupled with a low base due to three consecutive years of contraction at a 15 per cent CAGR from FY22 to FY25.

The target price of Rs 10,700 is based on 30x FY27E core earnings.

Meanwhile, Bajaj Auto shares slipped 2.39 per cent to trade at Rs 8,661.10 on Friday.