Shares of India’s largest two-wheeler manufacturer by market capitalization, Bajaj Auto Ltd (BAL), tumbled 13% on Thursday after the company’s Q2FY25 profit missed the street estimate and it signalled lower than anticipated sales this festive season.
Bajaj Auto Executive Director Rakesh Sharma said that so far motorcycle sales in the ongoing festive season are below expectations as demand is muted and the industry will be lucky if it sees 3-5% growth compared to last year.
"The responses in the motorcycle industry are a little bit muted in the sense that we thought that about 6 to 8% growth will be there in the festive period, but it is not that much. It is 1-2%, almost very similar to last year, same period," said Sharma.
He added that due to muted growth in motorcycle sales, the overall growth prospects of the two-wheeler industry could be impacted for the full fiscal.
Bajaj Auto shares crashed 13.11% on the NSE to close at Rs 10,093.50. The stock was also the top laggard in the Nifty 50 pack which plummeted nearly 1% on Thursday.
BAL’s low sales warning in the festive season also had a ripple impact on the shares of other two-wheeler manufacturers such as Hero MotoCorp and TVS Motor which fell by more than 3% each on Thursday. The Nifty Auto index fell by 3.54% on Thursday’s trade to 24,991.
Global brokerage Citi has issued a 'sell' call on Bajaj Auto with a target price of Rs 7,800, a downside of 33% from the Wednesday closing price of Rs 11,616. Citi says that the company's Q2 performance was marginally below estimates due to a slight miss in average selling prices (ASPs) and gross margins.
Another global brokerage CLSA has an "underperform" rating on Bajaj Auto with a price target of Rs 9,493. CLSA said that Bajaj's export volumes are recovering on a lower base but it currently trades at 33 times the FY2026 Earnings Per Share estimates.
Domestic brokerage Emkay said that the results were slightly disappointing due to lower average selling prices (ASPs). They noted that the company's two-wheeler retail growth has been modest, with a year-to-date increase of 6.7% and a September-October growth rate of just 5.7%.
They also highlighted that BAL is losing market share in the 125cc segment and while exports are recovering, the important Nigerian market remains 50 per cent below its peak. Emkay downgraded Bajaj Auto to a ‘Sell’ rating from ‘Reduce,’ setting a new target price of Rs 9,500 based on a multiple of 26x core earnings for Sep-26E, up from 23x for Jun-26E.
Bajaj Auto on Wednesday reported a net profit of Rs 2,005 crore for the quarter that ended in September (Q2FY25), a growth of over 9% year-on-year. The company's revenue increased by 21.8% year-on-year to Rs 13,127 crore.