Bajaj Auto Shares Bounce Back: Analysts See 30%+ Upside Potential

📈 Bajaj Auto shares erased early losses and turned positive after the company posted a 14% YoY rise in Q1 FY26 profit. Analysts maintain bullish outlook despite EV headwinds.

Shares of Bajaj Auto swung sharply on August 7, falling as much as 4% in early trade before recovering to Rs 8,202, up 0.3% on the NSE by afternoon. The movement came after the two-wheeler major reported a 14% year-on-year (YoY) increase in consolidated net profit to ₹2,210.44 crore for the first quarter of FY26, while revenue from operations rose 10% to ₹13,133.35 crore.

The company’s Q1 vehicle sales stood at 11.11 lakh units, a marginal rise from 11.02 lakh units last year. However, domestic sales fell 8% YoY to 6.35 lakh units, while exports rose 16% to 4.76 lakh units, led by strong growth in two-wheeler (14%) and commercial vehicle (32%) exports.

🔎 Brokerage View: Still a Buy for Long-Term Investors

Bernstein maintained an Outperform rating on Bajaj Auto, with a target price of ₹11,000, indicating a 34.5% upside from current levels. The brokerage highlighted Bajaj Auto’s resilient business model, diversified multi-powertrain portfolio, and robust export strategy as key strengths during uncertain demand conditions.

CLSA also retained an Outperform rating but revised its target price down to ₹9,971, citing moderation in export recovery. Despite this, CLSA noted positive momentum in the Latin American and ASEAN markets, forecasting 10% YoY growth in export volumes, slightly below Bajaj’s own FY26 guidance of 15–20%.

⚡ EV Challenges: Supply Crunch Hits Production

Bajaj Auto disclosed that it cut electric two-wheeler production by up to 50% in July, citing a global shortage of heavy rare earth magnets. This disruption, triggered by China’s suspension of magnet exports since April, has significantly affected EV manufacturers globally.

The company expects output constraints to persist through August and September, with production levels remaining below planned capacity. In response, Bajaj is pursuing two parallel strategies:

♦ Switching to light rare earth magnets

♦ Developing alternative technologies that avoid rare earths entirely

📊 Investor Takeaway: Volatility Offers Opportunity

While Bajaj Auto shares are down 7% YTD, analysts believe the recent weakness may present a buying opportunity for long-term investors. The company’s strong profitability, improving exports, and strategic adaptability in the EV segment are seen as key drivers for future growth, despite short-term headwinds in the domestic market and electric vehicle supply chain.