Fri Oct 18 06:55:26 UTC 2024: ## Bajaj Auto Shares Tumble After Disappointing Q2 Earnings, But Some Analysts Remain Bullish

**Mumbai, October 17, 2023:** Bajaj Auto shares plummeted over 10% in morning trade today, reaching Rs 10,414, after the company reported lower-than-expected net profit for the second quarter of FY2024-25.

The Pune-based two-wheeler giant saw a 9% increase in standalone net profit to Rs 2,005 crore, falling short of analyst expectations. While revenue rose 22% to Rs 13,127 crore, the company’s revised growth outlook for two-wheeler sales in India to a modest 5% also contributed to the slump.

**Mixed Reactions from Analysts:**

* **Citi** issued a ‘sell’ call on Bajaj Auto, with a target price of Rs 7,800 per share, representing a 33% downside from the last closing price. The firm attributed the underperformance to a slight miss in average selling prices (ASPs) and gross margins.
* **Macquarie** maintained a neutral stance with a target price of Rs 11,200 per share, highlighting disappointing gross margins due to a higher share of new products. They also noted a muted festive outlook.
* Despite the below-expectation profit, **HSBC, Jefferies and Morgan Stanley** all issued bullish calls, citing positive growth levers.
* **HSBC**, with a target price of Rs 14,000, sees Bajaj Auto catching up with a 30% market share and highlights the growing penetration of electric vehicles in the three-wheeler segment.
* **Jefferies** also has a ‘buy’ recommendation, suggesting continued quarter-on-quarter improvements in exports and projecting a 14% volume CAGR over FY24-27.
* **Morgan Stanley** remains ‘overweight’, acknowledging potential offsetting of product mix gains by the rise of electric vehicles.

**Strong Latin American Performance, Expansion Plans in Brazil:**

Bajaj Auto reported strong performance in its Latin American markets, with 20% year-on-year growth, although African markets continued to decline. The company is optimistic about exports in the coming quarter, expecting a better showing in Q3 compared to Q2.

The company is strengthening its presence in Brazil by ramping up its manufacturing capacity in 2024. Bajaj will boost production at its Manaus facility from 20,000 units to 35,000 units annually, supported by an Rs 84 crore investment into its Brazilian arm.

**Disclaimer:** This article is for informational purposes only and does not constitute investment advice.

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