Bajaj Auto share price drops over 10% after Q2 results. Should you buy the stock?

Bajaj Auto share price plunged over 10% in early trade on Thursday, October 17 after the company announced its Q2 results. The stock declined as much as 10.88% to ₹10,352.70 apiece on the BSE.

Bajaj Auto reported a standalone net profit of ₹2,005.04 crore in the second quarter of FY25 (Q2FY25), a rise of 9.2% compared to ₹1,836.14 crore in the corresponding period last year.

The auto major's total revenue from operations in Q2FY25 increased by 22% to ₹13,127.47 crore from ₹10,777.27 crore in the year-ago period.

EBITDA during the said quarter rose 24.4% year-on-year (YoY) to ₹2,652.4 crore from ₹2,122 crore, while EBITDA margin improved by 40 bps on year to 20.2% from 19.8%.

According to Chirag Jain, Senior Research Analyst, Emkay Global Financial Services, Bajaj Auto Q2 results were marginally weak on lower Average Selling Price (ASP).

“The company’s two-wheeler retail growth has been muted, with market share loss in the fast-growing 125cc category; management expects FY25 industry growth to be closer to 5% than 8% if the ongoing below-par festive performance persists,” Jain said.

The brokerage firm downgraded Bajaj Auto to ‘Sell’ from ‘Reduce’, and revised the target price to ₹9,500 per share, implying a downside of over 18% from Wednesday’s closing price.

Emkay Global said it prefers Hero MotoCorp, with its better risk-reward and TVS Motor Company on improved growth prospects in the two-wheeler segment.

Foreign brokerage firm Citi has a ‘Sell’ rating on Bajaj Auto and a target price of ₹7,800 per share, signalling a downside of more than 32%. It believes Bajaj Auto's Q2 results were marginally below estimates due to a slight miss in ASPs and gross margin.

Nuvama Institutional Equities said Bajaj Auto’s two-wheeler volume prospects are positive, and reckons 8% CAGR over FY24–27E led by 7% and 10% growth in domestic and export segments.

“Bajaj Auto’s presence is improving in the electric/CNG space and the share of these vehicles should rise to 20%-plus in domestic 2Ws in FY27E. We are increasing FY25E–27E EBITDA by up to 3%. We are building in revenue/EBITDA CAGR of 12%/15% over FY24–27E with an average RoE of ~36%,” Nuvama Equities said.

It maintained a ‘Buy’ call and raised the Bajaj Auto share price target to ₹13,200 from ₹12,000 earlier based on 38x Sep-26E core earnings (35x earlier) plus cash/investments of ₹814 per share.

A healthy outlook and better presence in the electric/CNG space have led to a target P/E upgrade, it said.

Bajaj Auto Stock Price 

Bajaj Auto share price has seen a sharp fall recently as the auto stock plunged over 13% in one month. However, Bajaj Auto shares have rallied over 53% year-to-date (YTD) and has given multibagger returns of over 101% in the past one year.

“Bajaj Auto stock price has tested its 100 Day Moving Average (DMA) at ₹10,328 after a sharp fall today. The stock seems to be in a mildly oversold zone and likely to form a base. Traders are advised to add Bajaj Auto shares in small quantities with a stop loss below ₹10,000 level. Stop levels should be ₹9,800 - 10,000,” said Milan Vaishnav, founder of ChartWizard FZE and Gemstone Equity Research.

At 10:35 am, Bajaj Auto shares were trading 10.77% lower at ₹10,366.00 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.