Bajaj Auto Stock is one of India’s leading two-wheeler manufacturers. Recently, the stock price has witnessed major turbulence. After touching an all-time high of ₹12,774 per share in late September, the company’s stock has declined by 29% and touched a four-month low. A host of poor financials, along with competition that seems to be escalating within the electric two-wheeler segment, has Bajaj Auto at the crossroads. Taking the following analysis into account, we can then shed light on its current performance in the market and future expectations from it.
The Bajaj Auto Stock Performance In Greater Detail
Bajaj Auto’s stock has been downtrend since its peak in late September 2024. On November 28, 2024, Bajaj Auto shares plummeted nearly 2%, reaching a four-month low of ₹9,013 per share. At one time, the stock even crossed the ₹9,000 mark and went as low as ₹8,992 in intra-day trade. The sudden decline has raised many questions in the minds of investors as to whether the stock has fallen fall or whether it is on the upswing.
A fall of 29.5% from its peak value of ₹12,774 translates to wiping out considerable value from the investor’s portfolio. Some factors that have caused this sell-off include poor quarterly results, weak sales at home, and increasing competition in the electric two-wheeler market.
Disappointing Financial Results and Profitability Concerns
The underwhelming financial performance of Bajaj Auto for the September quarter proved to be a significant contributor to its stock slump. For the quarter, the consolidated profit after tax (PAT) for the company fell to ₹1,385 crore from ₹2,006 crore during the same period last year, thereby reporting a decline of 31% from the same period last year. A steep drop in profitability mainly resulted from increased expenses and a one-time blow from the increase in provisions for deferred tax.
Although the company posted revenue from operations at ₹13,247 crore in the September quarter, up from ₹10,838 crore in Q2 of the previous year, profit growth did not meet investor expectations. That disparity between revenue growth and profit contraction set alarm bells ringing about the company’s cost structure and its inability to manage costs well in a challenging market environment.
Also, Bajaj Auto toned down its sales guidance for the two-wheeler segment of India, reducing the predicted growth to a paltry 5%, at the low end of its original estimates of 5-8%. This further lowering of the growth guidelines an enough catalyst to fuel investor weakness and sustain the sell-down.
Weak Festive Sales and Declining Market Share
October 2024, typically one of the stronger sales months with the festive season in, Bajaj Auto reported weak sales at home. Domestic sales at Bajaj Auto dropped 8% year-on-year and fell to 3.03 lakh units from 3.29 lakh units. Even though exports have grown during this period for Bajaj Auto, the sales performance remains very disappointing when compared with that of the competitors.
On the other, major competitors like Hero MotoCorp, TVS Motor, and Eicher Motors saw good growth in their domestic sales for October. Domestic sales growth of the above-mentioned companies stood at 17%-26%. The stark contrast in performance has created an air of apprehension over Bajaj Auto’s ability to sustain its market share with the growing competition and weakening domestic demand.
The market share of Bajaj Auto in the two-wheeler segment declined to 11.15% in October from 11.84% recorded in the previous month. The market leader Hero MotoCorp maintained a dominant market share of 27.92%, followed by Honda with 26.84%, and TVS Motor at 17.04% market share, as reported by Federation of Automobile Dealers Associations (FADA) data.
Competition in the Electric Two-Wheeler Space
One of the key challenges for Bajaj Auto is the increasing competition in the electric two-wheeler (E2W) segment. Even though Bajaj Auto is making all efforts to be at the forefront of the electric vehicle market, especially through its electric scooter offerings, the competition is growing stiff. Many new entrants are trying to capture the market share, and existing players are increasing their electric vehicle portfolios.
Bajaj Auto has ambitious plans to grab the second position in the E2W space, and it continues to expand its range of electric vehicles. However, with an increasing number of players, and other companies announcing cheaper electric scooters, Bajaj’s market position will face immense pressure.
Market Capitalization Deal market market
capitalization of Bajaj Auto also has faced a shock, as the fall in the value of the stock has brought down its market cap drastically. The market capitalization of Bajaj Auto has seen a loss of ₹1.19 lakh crore within just a few weeks when its market capitalization dipped from ₹3.71 lakh crore to ₹2.52 lakh crore in October. The overall decline in market value mirrors the broad investor sentiment and points to the challenges still experienced by the company in such a highly competitive and volatile market environment.
Technical Outlook: Is There More Downside?
Technical analysts have also sounded out on Bajaj Auto’s stock performance, and their outlook is generally negative for the short term. Rajesh Malviya, Senior Vice President of Technical and Derivatives Research at Axis Securities, says that the stock is moving lower and forming a series of lower tops and bottoms, which is a short- to medium-term downtrend. The stock is trading below its 20, 50, 100, and 200-day Simple Moving Averages (SMA), which also strengthens the bearish Malviyaalviya noted that the stock has violated its support level of ₹9,320 on a closing bsignallingnaling a growing bearish sentiment. According to his analysis, the stock could potentially fall further to ₹8,500-₹8,000 in the coming weeks, which may serve as the next key level. While a relief rally toward ₹10,000-₹10,500 could occur, investors should view any such rally as an exit opportunity for short-term traders.
Rajesh Bhosale, Equity Technical and Derivatives Analyst at Angel One, also shares the same concern. He mentions that this stock has gone into oversold territory, but says that there is no decisive indication of a reversal yet. He points out that the next critical support is ₹8,750, which was a crucial level at which the rally began in July, pushing the stock to its all-time high.
What’s next for Bajaj Auto Stock?
The stock of Bajaj Auto continues to face pressure, although its long-term prospects are still good. Bajaj Auto is an established player in the two-wheeler space with a continuous record of innovation, quality, and market leadership. It’s entering the electric vehicle space, and new product launches will hopefully serve as catalysts for future growth.
But for investors, the near-term prospects are uncertain, and the stock is likely to be volatile in the near term. Bajaj Auto needs to address several issues cost structures, the competitive pressures in the electric vehicle space, and the ability to regain momentum in the domestic market. Investors should exercise caution and keep a close watch on the company’s forthcoming earnings reports, sales data, and updates on its electric vehicle initiatives.
In summary, Bajaj Auto’s stock has experienced a major setback, and it is too early to consider writing off the computer prospects. The short-term obstacles are enormous, but the long-term opportunities for the company’s diverse product portfolio, including its electric vehicle strategy, remain bright. While the market continues to evolve, Bajaj Auto will have to adjust to new trends while strengthening its weaknesses and capitalizing on emerging opportunities to gain investor confidence with sustained growth.
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