Drumil Modi, Pune
The automotive sector around the world has been struggling. Manufacturers have their inventory piling up, with no signs of rise in sales. Most of the automotive manufactures are seeing a bearish trend in the market. Customers are unsure if they should spend their hard-earned money on EVs, Hybrid or ICE powered vehicles.
Bajaj on July 16 kicked off the earnings show for Q1 FY 2025. The Bajaj Auto share has seen a 40% incline in its share price since the start of the year. The company says, “considering the market trend our Q1 FY25 earnings have been better than expected.”
The Indian market has always been a great playfield for 2-wheeler sales. Bajaj has posted an 18% on-year rise in net profit of Rs1,988 crore. However, this was not enough to boost the investors’ confidence which was evident as the share tumbled by another 4% post the earnings show.
Bajaj has the biggest motorcycles portfolio in the category, this includes their own Pulsar series, Austria’s KTM and British Triumph. On paper the company seems to be on top of its game. But the industry trends suggest that Bajaj might have a tough year ahead of it just like other automotive companies. Adding to the already bad situation is the lack of support from brokers. UBS, CLSA and Macquarie have issued bearish calls on the Bajaj Auto share.
UBS and CLSA suggest that the share will underperform therefore a lot of people have been selling their Bajaj Auto shares to exit at maximum profit. Macquarie on the other hand suggests that the share is far from seeing an upward trend but there is hope. With the introduction of India’s first CNG motorcycle manufacturing plant in Latin America, rise in their electric three wheelers and their premium motorcycles partnership with Triumph and KTM the company still should provide growth in the long term.
The auto sector globally has seen a decline due to low demands and high prices. Companies as big as Volkswagen have been struggling and re-strategizing. Bajaj and their footprint in the 2-wheeler industry which has seen a 3X growth over the rest of the industry in sports bike sales. Their EV three-wheeler seems to have a promising future as well. Bajaj might defy the odds and become even bigger as the rest of the industry struggles.