Bajaj Auto share price falls over 5% today. Should you buy?

Bajaj Auto share price declined sharply during Monday's trading session. Is it a good opportunity to buy the stock? Here is all you need to know.

In Short

• Bajaj Auto share price down over 5% amid weak sales
• Domestic sales dropped 8% in October 2024
• Company reported 31.4% decline in Q2 net profit

Bajaj Auto's share price experienced a decline of over 5% during early trading on Monday, following the company’s announcement of disappointing sales figures for October 2024.

Initially, shares opened higher but quickly dropped to a low of Rs 9,375.50 on the Bombay Stock Exchange (BSE), marking a steep decline from their 52-week peak of Rs 12,772.15.

The BSE Sensex and Nifty 50 also faced downward pressure, both trading roughly 1.5% lower on Monday morning.

Despite the recent drop, the company's shares have generated a substantial return of 75.57% over the past year and have risen 41.44% in the calendar year 2024. However, they have faced a correction of nearly 19.47% over the past month as investors opted to book profits at higher price levels.

BAJAJ AUTO SALES

In terms of sales performance, Bajaj Auto reported an 8% decrease in domestic sales for October 2024, totaling 3.03 lakh units compared to 3.29 lakh units in the same month last year.

On a positive note, exports surged by 24%, reaching 1.75 lakh units, up from 1.41 lakh units in the corresponding period a year earlier. Overall, the company’s total sales saw a modest increase of 2%, climbing to 4.79 lakh units from 4.71 lakh units in the previous year.

Breaking down the figures, domestic sales of two-wheelers fell by 8%, from 2.78 lakh units to 2.55 lakh units. Sales of commercial vehicles also declined, down 6% to 47,922 units from 51,132 units year-on-year, although exports for this segment rose by 46%, reaching 17,413 units.

For the second quarter ending September 2024, Bajaj Auto recorded a 31.4% decrease in its consolidated net profit after tax (PAT), falling to Rs 1,385.44 crore from Rs 2,020.05 crore in the same quarter last fiscal year. The decline was impacted by a one-time payment of Rs 211 crore related to changes in the taxation structure affecting deferred tax on investment income.

Despite the drop in profit, revenue from operations grew by 22.2%, reaching Rs 13,247.28 crore in Q2 FY25, up from Rs 10,838.24 crore in the same period last year. The growth was primarily driven by robust vehicle sales and spare parts, along with a recovery in exports.

Sequentially, profit was down 28.65%, while revenue from operations saw an 11% rise. On the operating front, EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortisation) reached an all-time high of Rs 2,653 crore, reflecting a year-on-year increase of 24%.

SHOULD YOU BUY?

Brokerage firm Motilal Oswal maintained a ‘neutral’ rating on Bajaj Auto in its Q2 FY25 analysis, setting a target price of Rs 11,450.

The firm noted that the stock appears fairly valued after outperforming the Nifty Auto Index over the past year, driven by market share gains in the 125cc+ domestic motorcycle segment and improved margins.

Meanwhile, Anand Rathi issued a "BUY" recommendation with a sum-of-parts target of Rs 14,000, citing expectations of stronger volume growth exceeding 20% in FY26, following an anticipated 13% growth in FY25.

It highlighted that the success of Bajaj Auto's CNG motorcycle launch, a rebound in African markets, and a ramp-up in electric vehicle (EV) production would be key factors contributing to the company's performance.

The brokerage has projected Bajaj Auto to be a top performer in the industry in FY26, driven by market-share gains from its successful CNG two-wheelers, EVs, and the Triumph range.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)