Bajaj Auto, a significant player in the automotive sector, has experienced a drop in sales for April, reflecting sluggish demand in the largest two-wheeler market globally. This decline has caught the attention of Morgan Stanley, which has adjusted its price target for the Pune-based company by 8%, now set at ₹9,128. Alongside this change, the brokerage has also updated its projections for volume, EBITDA margins, earnings per share, and the compound annual growth rate (CAGR).

Sales Figures Show a Downward Trend

In April, Bajaj Auto’s total vehicle shipments reached 365,810, down from 388,256 units in the same month last year, marking a 6% year-on-year decrease. This decline primarily stems from a 13% drop in two-wheeler sales, which stood at 188,615 units. However, there was a silver lining, as two-wheeler exports increased by 4%, totaling 129,322 units. Additionally, the company’s three-wheeler segment posted a 3% growth, achieving 47,873 units sold both domestically and internationally.

Revised Financial Outlook

Morgan Stanley’s revisions reflect a cautious approach towards Bajaj Auto’s future performance. The brokerage has lowered its volume forecasts by 4% for fiscal 2026 and 5% for fiscal 2027. The long-term CAGR forecast has also been adjusted to 8.5%, driven by the challenges facing the domestic market. Furthermore, earnings per share (EPS) estimates for the upcoming fiscal years have been reduced by 5-6%, while the long-term EBITDA margin expectation remains steady at 20%.

Future Projections

Bajaj Auto’s stock outlook is concerning, with a potential downside in the bull case scenario dropping from ₹12,459 to ₹11,323. The base case projection has also decreased, now sitting at ₹9,128, down from ₹9,891.

Conclusion

As Bajaj Auto navigates through these challenging market conditions, the adjustments made by Morgan Stanley highlight the need for the company to adapt and innovate in order to regain momentum. The mixed performance, particularly in exports, might provide a foundation for recovery, but addressing domestic demand remains crucial for future growth.

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