Bajaj Auto Q2 impact: Bajaj Auto shares fell as much as 10.65% to an intraday low of Rs 10,380 a share on Thursday, October 17, 2024. Despite the company's good performance in the September quarter (Q2FY25), local and international brokerages responded differently.

Emkay analysts reported slightly disappointing results due to reduced average selling prices (ASPs). They pointed out that the company's two-wheeler retail growth has been moderate, with a year-to-date gain of 6.7% and a September-October growth rate of only 5.7%.

Furthermore, Bajaj Auto is losing market share in the expanding 125cc sector. While exports are rising, the vital Nigerian market remains 50% below its high. On a positive note, the three-wheeler (3W) industry is expanding, which could improve future performance.

Given these considerations, Emkay downgraded Bajaj Auto to 'Sell' from 'Reduce,' giving 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. They choose Hero MotoCorp Ltd (HMCL) due to its better risk-reward profile, while TVS Motor Company Ltd (TVSL) has stronger growth possibilities.

Citi, an international firm, mirrored the pessimistic mood, assigning a 'Sell' rating and a target price of Rs 7,800, citing slightly unsatisfactory Q2 results due to a modest deficit in ASPs and gross margins.

In contrast, Nuvama analysts were more enthusiastic about Bajaj Auto's two-wheeler volume prospects, estimating an 8% compound annual growth rate (CAGR) from FY24 to FY27, driven by 7% growth in the domestic market and 10% growth in exports.