Bajaj Auto Q3 Results: Record Revenue Meets Analyst Caution

Introduction

Bajaj Auto Ltd. announced a landmark performance for the third quarter of fiscal year 2025-26, reporting its highest-ever quarterly revenue and profit. The automaker's consolidated revenue from operations surged 23% year-on-year to ₹16,204.45 crore, while consolidated net profit grew by 25% to ₹2,749.82 crore. Despite these strong figures, which were driven by robust growth across all business segments, the analyst community remains divided, with significant debate surrounding the stock's current valuation and long-term market share stability.

A Record-Breaking Quarter

Bajaj Auto's Q3 performance was underpinned by double-digit growth across its domestic motorcycle, electric two-wheeler, three-wheeler, and export businesses. The company crossed the ₹15,000 crore revenue mark for the first time in a single quarter, supported by record sales volumes and a richer product mix that favored higher-margin vehicles. EBITDA for the quarter rose 22% year-on-year to ₹3,161 crore, with a healthy margin of 20.8%. This margin was achieved despite commodity inflation, thanks to currency tailwinds, scale benefits, and higher Production Linked Incentive (PLI) benefits.

Domestic Momentum and Premium Focus

The domestic market was a key contributor to the strong results, particularly in the premium motorcycle segment. The company reported its best-ever quarter for motorcycles in the 125cc-plus category, driven by a refreshed Pulsar portfolio. Management remains optimistic about near-term demand, forecasting domestic two-wheeler industry growth of 12%-15% over the next few quarters. To capitalize on this, Bajaj Auto plans to launch eight product refreshes over the next four months and introduce a new 125cc motorcycle later in the year, aiming to outpace industry growth and gain market share.

Strong Resurgence in Export Markets

After a challenging period, Bajaj Auto's export business staged a significant recovery. For the first time in 15 quarters, export volumes surpassed 600,000 units, marking an 18% year-on-year increase. This rebound was driven by strong demand in key overseas markets across Africa, Asia, and Latin America. The company expects to sustain this momentum, projecting an export run rate of over 200,000 units per month in the fourth quarter, which would represent 20%-25% YoY growth.

Electric Vehicle Division Gains Traction

The Chetak electric scooter has emerged as a significant growth driver for the company. In Q3, the EV division's revenue contributed approximately 25% of total domestic revenue. Volumes for the Chetak rebounded sharply, growing 70% quarter-on-quarter as supply chain issues were resolved. Importantly, the EV business has now achieved double-digit profitability, a notable turnaround from the losses reported a year ago. This positions Bajaj Auto strongly in the rapidly growing electric two-wheeler market.

Analyst Perspectives: A Divided Street

Despite the stellar financial performance, brokerage views on the stock are mixed, primarily due to valuation concerns. While most analysts acknowledge the strong operational momentum, their ratings and price targets reflect differing opinions on the future upside.

The Valuation Conundrum

A key point of contention for analysts is the stock's valuation. Bajaj Auto is currently trading at approximately 24 times its estimated FY27 earnings. This represents a premium to its 10-year average price-to-earnings (P/E) ratio of 21x. While bulls argue that the premium is justified by strong export recovery and a growing EV portfolio, bears point to the risk of domestic market share erosion and the cyclical nature of the auto industry as reasons for caution.

Market Reaction and Stock Performance

Following the announcement of its Q3 results on Friday, January 30, shares of Bajaj Auto ended the session 0.76% higher at ₹9,584. The stock has remained relatively flat on a year-to-date basis. Out of 46 analysts tracking the company, 25 have a 'Buy' rating, 14 recommend 'Hold', and seven have issued a 'Sell' call, reflecting the divided sentiment on the street.

Conclusion

Bajaj Auto has delivered an exceptional quarter with record-breaking financial figures, showcasing strength across all its business verticals. The company's focus on premium motorcycles, a resurgent export market, and a profitable EV division provide a strong foundation for future growth. However, investors will be closely watching whether the company can sustain its market share and if its growth trajectory can justify the premium valuation. The upcoming product launches will be critical in determining its ability to continue outpacing the industry.