On Friday, JPMorgan updated its outlook on Bajaj Auto Ltd (BJAUT:IN) shares, increasing the price target to INR 11,225 from INR 10,400. The firm continues to recommend an Overweight rating on the stock. The adjustment reflects a positive view of the company's performance and future prospects.
The revised price target represents an 8% increase from the previous figure, indicating confidence in Bajaj Auto's growth trajectory. The Overweight rating has been reaffirmed, suggesting that JPMorgan expects the company's stock to outperform the average return of the stocks the analyst covers over the next six to twelve months.
The endorsement by the firm is based on several key factors. These include a recovery in the domestic two-wheeler (2W) segment with an improved product mix, momentum in the electric vehicle (EV) market share for both 2W and three-wheeler (3W) categories, and a gradual rebound in exports. Additionally, the domestic 3W segment, which provides the highest margins, remains strong.
JPMorgan highlighted Bajaj Auto's financial discipline and strategic initiatives, noting the company's ability to generate strong free cash flow, approximately 100% of its profit after tax (PAT). This financial strength has enabled Bajaj Auto to enhance shareholder value through dividends and buyback programs.
The firm also anticipates a compound annual growth rate (CAGR) of 20% in earnings per share (EPS) for Bajaj Auto from the fiscal year 2024 to 2027. The projection is supported by the addition of new opportunities for Bajaj Auto, such as the CNG motorcycle, partnerships like the one with Triumph, and the export of quadricycles. JPMorgan has increased its EPS estimates for fiscal years 2026 and 2027 by 3-5%, leading to the raised price target for Bajaj Auto's shares.
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