Accumulate Bajaj Auto; target of Rs 11,700: Prabhudas Lilladher

What happened

Prabhudas Lilladher retained an Accumulate rating on Bajaj Auto with a target price of Rs 11,700. The broker cited strong Q2FY27 standalone results, with most line items beating expectations.

Confirmed

Global impact / market context

A higher target price signals the broker expects more value from Bajaj Auto, driven by cost cuts, better pricing, and electric vehicle expansion. Favoring higher-priced bikes over low-profit entry models could lift profit per sale even if total market share slips.

Analyst inference

The entry-level 75-125cc motorcycles make up more than half of Bajaj Auto's two-wheeler volumes, so shifting focus risks losing share there. Investors must weigh that pressure against growth in the 125cc+ segment, new launches, and margin support from a weaker rupee.

Analyst inference

What to watch

1. Watch whether retail sales of the refreshed portfolio and new launches ramp up as expected, since the broker says these are meant to complement each other and support volumes. Confirmed
2. The broker proposes that cost reductions, calibrated pricing actions, improving mix, INR depreciation, and EV capacity and network expansion should help sustain margins. Proposed
3. Track Bajaj Auto's domestic market share in entry motorcycles, because trading share there for higher-margin 125cc+ growth could pressure overall volumes if the shift is slow. Analyst inference

Evidence

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