Buy Bajaj Auto: target of Rs 11,950: ICICI Securities

What happened

ICICI Securities said Bajaj Auto's Q2FY27 revenue beat its estimate, with profit per sale stable at 20.9% despite a pricier raw material basket. Management expects double-digit domestic two-wheeler industry growth in Q3 and healthy three-wheeler demand.

Confirmed

Global impact / market context

Bajaj Auto's profit per sale held steady even as raw material costs rose, showing pricing power. Stable profit per sale supports profit per share, which underpins ICICI Securities' higher Rs 11,950 target, implying more room for the stock from the analyst's view.

Analyst inference

The report favors a domestic two-wheeler recovery and rising electric three-wheeler share as volume drivers. Costlier commodities may pressure profit per sale in Q3, but price increases, higher factory utilization, and better electric vehicle profitability are expected to lift profit per sale over time.

Analyst inference

What to watch

1. ICICI Securities said management sees healthy domestic two-wheeler demand and expects the industry to grow at a double-digit pace during Q3, which would lift Bajaj Auto's volumes and revenue if it holds share. Confirmed
2. Watch whether higher raw material costs keep squeezing profit per sale in Q3, and whether planned price increases and better electric vehicle profitability offset that pressure in the medium term. Analyst inference
3. Monitor Bajaj Auto's response to product launches and its domestic two-wheeler market share, as the report flags these as monitorables that could change the earnings path and target. Proposed

Evidence

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