Bajaj Auto Shares Surge 5% After Strong Q3 Earnings

Bajaj Auto, a leading two-wheeler manufacturer, delivered a stronger-than-expected performance in Q3, driven largely by its electric vehicle (EV) division. The EV segment contributed 45% of the company's total revenue, marking a significant rise from 30% in the same period last year. Additionally, Bajaj Auto's EV business turned profitable this quarter, which, along with its overall solid earnings, garnered positive reactions from brokerages.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

At 09:22 AM IST, Bajaj Auto's share price was at ₹8,745.15 on the NSE. Investor sentiment also reflected this optimism, with Bajaj Auto's share price climbing nearly 5% in early trading on January 29. 

For Q3 FY25, the company reported an 8% year-on-year increase in consolidated net profit, reaching ₹2,196 crore—surpassing Moneycontrol's estimate of ₹2,155 crore. Revenue from operations also grew by 8% to ₹13,169 crore, exceeding expectations of ₹13,016 crore.

The EV segment showed strong performance, delivering around 100,000 units in the quarter. Bajaj Auto doubled its market share in electric two-wheelers and tripled its presence in the electric three-wheeler category compared to last year. The segment also achieved a marginally positive EBITDA, marking a turnaround from losses in the previous year.

Despite the EV segment's growth, the company faced challenges in the competitive entry-level motorcycle segment, where it lost some market share. Citi highlighted this concern, noting that Bajaj Auto surrendered market share in this high-volume category. Similarly, Axis Securities pointed out a 100-basis-point market share decline in the first nine months of FY25, despite new model launches. As a result, Axis Securities maintained its 'sell' rating and lowered the target price by nearly 6% to ₹7,550.

Nonetheless, both brokerages and the company's management remain optimistic about Bajaj Auto’s future. The company anticipates volume growth over the next three to six months, with export expansion exceeding 20% and domestic growth expected at 6–8%.

Additionally, Bajaj Auto plans to enter the e-rickshaw segment by the end of Q4, aiming at a market with a monthly demand of 45,000 units. Nuvama Institutional Equities forecasts a 4% CAGR for domestic three-wheelers over FY25–27, driven by replacement demand and increased business activity.

Nuvama also expects three-wheeler exports (including quadricycles) to grow at a 13% CAGR, supported by stronger demand in Latin America and ASEAN, quadricycle entry into Egypt, and a low base. The brokerage has a 'buy' rating on the stock with a target price of ₹10,700.

While these growth drivers signal a promising trajectory for Bajaj Auto, Citi remains cautious due to the stock's high valuations. It retained its 'sell' rating with a price target of ₹7,900.