Bajaj Auto shares surge, analysts see more upside after two-wheeler maker's strong Q3 show

Bajaj Auto reported a set of quarterly earnings that beat analyst expectations on all fronts.

Bajaj Auto shares surged on Friday as Dalal Street returned to trade after a day's holiday, bucking the market trend amid selling across most sectors. The stock of Pune-based Bajaj Auto — India's largest two-wheeler maker — jumped by as much as Rs 275.7 or 7.4 per cent to Rs 3,993.1 apiece on BSE, after the auto major beat analysts' estimates on all grounds with its quarterly results.

Bajaj Auto shares traded with high volumes. At 11:20 am, the stock held on to the green with a gain of 6.6 per cent at Rs 3,961.8 apiece. As many as 51,000 Bajaj Auto shares changed hands for the day so far, as against a daily average of 13,000 in the past two weeks, according to exchange data.

The company — which manufactures Pulsar, Discover, Avenger and Dominar motircycles — reported a 22.8 per cent increase in net profit to Rs 1,491 crore for the quarter ended December 2022 compared with the corresponding period a year ago. Its revenue grew 3.2 per cent on a year-on-year basis to Rs 9,315 crore, according to a regulatory filing.

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Bajaj Auto's margin — a key measure of profitability — improved by 380 basis points to 19 per cent compared with the year-ago period.

According to Zee Business research, the company's quarterly net profit was estimated at Rs 1,365 crore and revenue at Rs 8,950 crore with a margin of 17.8 per cent.

Most brokerages have positive views on the two- and three-wheeler maker after the earnings announcement. CLSA maintained a 'buy' call on Bajaj Auto and raised its target price for the stock by Rs 165 to Rs 4,619. The brokerage raised its earnings assumptions for Bajaj Auto for the years ending March 2024 and March 2025 by 14 per cent and 15 per cent respectively.

Brokerage	Rating	Target	Upside/downside vs Wednesday's closing price
CLSA	Buy	4,619	+24.3%
JPMorgan	Overweight	4,400	+18.4%
Morgan Stanley	Overweight	4,449	+19.7%
Jefferies	Buy	4,300	+15.7%
Goldman Sachs	Buy	4,400	+18.4%
Nomura	Buy	4,340	+16.7%
Citi	Sell	3,500	-5.8%

CLSA, JPMorgan, Morgan Stanley, Jefferies and Goldman Sachs see up to 24 per cent upside potential in Bajaj Auto shares.

The Bajaj Auto stock grew 3.3 per cent in value in the quarter ended December 2022, a period in which the Sensex and Nifty50 headline indices rose 5.9 per cent each.

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