What should investors do with Bajaj Auto stock post Q1? Brokerages weigh in

The quarter saw Bajaj Auto revenues grow 6 per cent year-on-year to ₹12,580 crore, and Ebitda rise 3 per cent to ₹2,480 crore, slightly ahead of consensus.

Bajaj Auto Q1 review: Two, three-wheeler giant Bajaj Auto’s June quarter (Q1FY26) performance has prompted mixed but largely constructive reactions from brokerages. 

 

On the bourses, Bajaj Auto share price tumbled 3.63 per cent in intraday deals to ₹7,879.45 per share. Around 9:20 AM, Bajaj Auto shares were trading 1.75 per cent lower at ₹8,033.90 per share. By comparison, BSE Sensex was trading 0.23 per cent lower at 80,354.94 levels.  CATCH STOCK MARKET LATEST UPDATES TODAY LIVE 

While the company delivered on expectations and showed resilience through its diversified business model, analysts are turning slightly cautious on growth assumptions and margins, leading many to revise target prices downward – even as most retain a positive stance.

 

The quarter saw revenues grow 6 per cent year-on-year to ₹12,580 crore, and Ebitda rise 3 per cent to ₹2,480 crore, slightly ahead of consensus. Margins, however, dipped 50 basis points (bps) sequentially to 19.7 per cent – the first time in seven quarters they fell below the 20 per cent mark. The softness in margin performance was attributed to weaker dollar realisations and rising input costs, though it was partially cushioned by a better mix and operating leverage.

 

Nuvama highlighted this balancing act. The brokerage cut its FY26 and FY27 earnings estimates by 2 per cent each, factoring in a lower margin profile. Despite that, it maintained a 'Buy' rating on the stock, citing strong long-term fundamentals including a projected 7 per cent volume CAGR over FY25-28 – led by export growth of 13 per cent. The target price has been reduced to ₹9,400 from ₹10,700, based on a more conservative valuation multiple of 25x September-27E earnings.

 

Motilal Oswal echoed similar sentiments. It flagged concerns around Bajaj Auto’s domestic motorcycle market share loss and the slower-than-expected ramp-up of its CNG bike, 'Freedom'. 

 

Still, the quarter’s earnings beat – with PAT at ₹2,060 crore versus an estimate of ₹1,980 crore – came as a positive surprise, driven by higher other income. The brokerage kept a ‘Neutral’ call, citing fair valuations at ~25x FY26 EPS, and set a target price of ₹8,618.  ALSO READ | Trent Q1: Margin gains shine, but here's why analysts are turning cautious 

According to reports, foreign brokerage Bernstein, on the other hand, stood out for its continued bullish tone. The firm maintained its ‘Outperform’ rating and ₹11,000 target price, viewing the Q1 print as a reaffirmation of Bajaj Auto’s positioning as a stable business amid macro uncertainties. It pointed to the company’s ability to beat expectations across revenue, Ebitda, and PAT, while acknowledging the margin dip as a temporary blip.

 

Avendus also reportedly retained its 'Buy' recommendation but trimmed its target to ₹9,350 from ₹9,700. The brokerage expects domestic volumes to grow at 5 per cent and exports at 12 per cent through FY25-27, and sees the expanding electric vehicle portfolio as a key driver of medium-term growth. Margins are forecast to recover back to the 20 per cent level by FY27.

 

That said, Bajaj Auto’s Q1 results highlighted the company’s strengths – export resilience, a growing EV presence, and premiumisation of its portfolio – but also laid bare the challenges, especially in domestic motorcycles and margin compression. 

 

Brokerages believe that while short-term headwinds could cap immediate upside, Bajaj Auto’s long-term fundamentals remain strong.