Bajaj Auto shares climb over 7% post Q3 results. What should investors do?

Shares of Bajaj Auto climbed 7.4% to Rs 3,993 in Friday's trade on BSE after the company reported a nearly 23% year-on-year (YoY) rise in net profit for the quarter ended December to Rs 1,491.42 crore.

Its revenue from operations rose 3.3% YoY to Rs 9,315.14 crore whereas EBITDA increased by a sharp 29.4% YoY to Rs 1,777 crore and margins expanded by a whopping 386 basis points to 19.07%.

The domestic business saw sustained double-digit revenue growth across both two-wheelers and three-wheelers. The two-wheeler's performance was buoyed particularly by solid 125 cc+ festive season sales while three-wheelers volumes surged, leading to its record-high market share, the company said.

On its overseas business, the quarter marked the launch of motorcycles in Brazil with the well-recognized Dominar brand, the homegrown automaker said.

Should you buy, sell or hold Bajaj Auto stock? Here's what analysts say:

Motilal Oswal
"Bajaj Auto witnessed benefits of softening RM prices and favourable FX in 3QFY23, resulting in an eight-quarter high EBITDA margin of 19.1% (vs est. 16.7%). While export markets may take 1-2 quarters to recover, muted demand for domestic entry-level 2W may limit prospects of a healthy all-round growth for the company in the near term," Motilal said.

"We raise our FY23/FY24 EPS estimates by 4.5%/6% to factor in mix and FX benefits. We reiterate our Neutral rating with a TP of Rs 4,150 (based on 16x Dec-24 Consol EPS)," it said.

Yes Securities
Yes Securities has a buy recommendation on Bajaj Auto with a target price of Rs 4,438, which shows an upside potential of 12% from the current market prices.

"Bajaj Auto’s 3QFY23 results were better than expected as EBITDA/adj. PAT beat our/consensus estimates by 14.5%/8%. This was led by sharp 280bp QoQ (+410bp) expansion in gross margins at 29.4%. With large of RM benefit now part of P&L, we expect the same to stabilize ahead," it said.

Jefferies
Jefferies maintained a buy rating on Bajaj Auto post December quarter results with a target price of Rs 4300, indicating an upside potential of 8% from the current market price of Rs 3,968 per share.

HDFC Securities
HDFC Securities has a reduce rating on Bajaj Auto with a target price of Rs 3,857, which shows a downside of 3% from the current market price of Rs 3,968 per share.

"Management indicated that the near-term export outlook continues to remain weak due to the devaluation of local currency and erosion of purchasing power in its key regions but remained hopeful of an export revival by May-June 2023," it said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)