Target: ₹4,600

CMP: ₹4,294.75

In Q4-FY23, Bajaj Auto EBITDA margin stood at 19.3 per cent (+220bps YoY, +20bps QoQ), 40bps higher than JMF led by favorable mix. Domestic 2W demand is being led by premium segment (125cc+) and the company expects c.6-8% industry growth during FY24.

Introduction of first product with Triumph is expected during 1QFY24, followed by start of deliveries in the subsequent quarters. In e-2W segment, the company is gradually ramping up production and plans monthly run-rate of c.10k units in the near-term. Outlook for domestic 3W volume remains strong led by higher CNG demand.

Launch of its first e-3W is expected shortly as the company is awaiting FAME certification. We expect steady domestic demand (led by premium segments) to offset macro headwinds in export markets which may continue in the near-term.

Margins in the medium-term are likely to draw support from a) favorable mix and b) better export realization. Given the successful track record of product intervention by Bajaj Auto in the last few years, we remain positive on the stock.

We estimate revenue/EPS CAGR of 14 per cent/17 per cent over FY23-25. Maintain BUY with Mar’24 TP of INR 4,600 (17x PE).

Delay in new product launches and continued weakness in export markets are the key risks.