Bajaj Auto’s Q2 FY25 results were met with a sharp 8% drop in share price, sparking concern among investors. Despite a 22% growth in revenue, weaker-than-expected performance in certain segments, particularly in two-wheeler sales, led to a negative market reaction.
Q2 FY25 Financial Highlights
- Standalone Net Profit: ₹2,005.04 crore (up 9.2% YoY).
- Total Revenue: ₹13,127.47 crore (up 22% from ₹10,777.27 crore YoY).
- Weak Average Selling Price (ASP): Affected by muted growth in the two-wheeler segment.
Weak Average Selling Price (ASP)
Bajaj Auto’s Average Selling Price (ASP) has been impacted by sluggish growth in its two-wheeler segment, especially in the 125cc category. Despite the company’s overall revenue growth, these issues, along with a drop in market share, have raised concerns among investors.
Key Factors Driving the Share Price Drop
- Muted Retail Growth: Bajaj Auto experienced weak demand in the two-wheeler category, which saw slower sales than expected, particularly in the 125cc segment.
- Festive Performance Concerns: Bajaj Auto’s management hinted that FY25 industry growth could slow down if the current underwhelming festive season performance persists, affecting overall sales.
- Declining Market Share: The company lost ground to competitors like Hero MotoCorp and TVS Motor Company, which saw stronger growth in the domestic market.
Chirag Jain, Senior Research Analyst at Emkay Global Financial Services, noted that Bajaj Auto’s lower-than-expected performance in key areas has led to a downgrade from Reduce to Sell, with a revised target price of ₹9,500 per share.
Bajaj Auto Q2 Performance (Comparison)
| Metric | Q2 FY25 | Q2 FY24 |
|---|---|---|
| Revenue | ₹13,127.47 crore | ₹10,777.27 crore |
| Net Profit | ₹2,005.04 crore | ₹1,836.14 crore |
| YoY Growth | 22% (Revenue) | 9.2% (Net Profit) |
| ASP Decline | Moderate | Significant Impact |
Investment Outlook
Should You Buy Bajaj Auto Shares?
If you’re a long-term investor with confidence in the auto sector and willing to weather short-term volatility, Bajaj Auto might offer lower-level value. However, analysts like Emkay Global and Angel One prefer Hero MotoCorp and TVS Motor Company, which have shown stronger growth in key segments.
Disclaimer
This article is based on Bajaj Auto’s Q2 FY25 financial results as of October 2024. Market conditions may change, affecting the stock price.
