Brokerages See More Headwinds For Bajaj Auto, Maintain Bearish Outlook
An employee of Bajaj Auto puts the finishing touches to Bajaj Pulsar, during production at the company’s plant in Chakan, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)

Brokerages See More Headwinds For Bajaj Auto, Maintain Bearish Outlook

Most analysts maintained their neutral-to-bearish outlook on Bajaj Auto Ltd. as they expect headwinds for the two-wheeler maker to persists going forward.

The Pune-based company’s April-June quarter net income beat estimates even as raw material expenses rose amid a slump in demand domestically.

Revenue was largely in line with street expectations, said Ankit Merchant, auto analyst at SMC Institutional Equities. “The worrying part is the rising operating, manufacturing and employee costs,” he told BloombergQuint by phone.

While the Pulsar bikemaker’s domestic motorcycle market share rose, its operating margin contracted.

Here’s what analysts made of Bajaj Auto’s June-quarter results:


  • Cut target price to Rs 2,836 from Rs 2,901 with ‘Neutral’ rating.
  • Margin up 30 basis points due to reclassifying part of other income to operating income.
  • Lowered volume growth estimate over FY20 to 1 percent from 4 percent.
  • See margin headwinds from product mix, cost pressure from BS-VI.


  • Maintained ‘Sell’ with a target of Rs 2,400 per share.
  • Cost of raw materials was down 50 basis points quarter-on-quarter, which aided margins.
  • Management expects demand revival from August as the festive season starts.
  • Price increases due to BS-VI and safety norms to impact demand ahead.
  • Dealer inventory at eight weeks increases the likelihood of volume decline in the second quarter.

Motilal Oswal

  • Maintained Neutral with target of Rs 2,900.
  • Weaker mix, higher cost impacted profitability.
  • Sales for July have been weaker than June this time around.
  • The company isn’t aggressively looking to cut inventory due to upcoming festivity.
  • Outlook appearing challenging due to current headwinds and upcoming BS-VI issue.


  • Maintained ‘Sell’ with target of Rs 2,320.
  • Q1 margins contracted due to aggressive marketing spends and adverse mix
  • Cut FY20 earnings per share estimates by 8 percent driven by a 5 percent cut in volume estimates.
  • Margins unlikely to recover to previous levels moving ahead.
  • Values KTM business at Rs 120 per share.

Also read: Dealerships Shut Showrooms, Cut Jobs To Survive Auto Slump

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