Bajaj Auto faces a dual reality: Export tailwinds meet cooling domestic demand

While strong overseas performance and a surging electric Chetak portfolio provide a buffer, analysts warn of a consumption slowdown at home in early FY27.

The Pune-based two-wheeler major, Bajaj Auto, finds itself in a tug-of-war between robust international demand and a softening domestic market as the new fiscal year kicks off. Motilal Oswal Financial Services (MOSL) has maintained a ‘Neutral’ rating on the company, pinning a target price of Rs 10,025 on the scrip. Investors keeping a close watch on the bajaj auto share price will note that while the brokerage remains constructive on the manufacturer’s long-term earnings trajectory, the immediate outlook is tempered by early indicators of a slowdown in India.

Growth drivers and domestic hurdles

Despite the cooling domestic sentiment in the first two months of FY27, management at the company maintains a steady outlook, projecting industry growth in the range of 7-9 percent for the near term. A major bright spot in the domestic narrative has been the Chetak electric vehicle range. The successful rollout of the more affordable C2501 model has provided significant momentum, helping the brand gain a firmer foothold in the competitive EV space.

However, the domestic caution is being balanced by a stellar run in exports. Bajaj has continued to see strong traction in key overseas markets, particularly across the LATAM and ASEAN regions. This resilience in global markets is expected to remain a critical pillar for the company throughout FY27, acting as a hedge against the sluggishness currently being observed in local showrooms.

Financial health and future targets

The recent financial performance paints a picture of a company operating at high efficiency. In the January-March quarter of FY26, the company posted a consolidated net profit of Rs 3,492.21 crore, a massive jump from Rs 1,801.85 crore in the corresponding period a year earlier. This performance was bolstered by record sales volumes and favorable foreign exchange movements. Standalone revenue also saw a healthy 32 percent year-on-year increase, reaching Rs 16,005 crore.

Looking ahead, MOSL expects the momentum to hold, projecting a compound annual growth rate (CAGR) of 15 percent in revenue and 15 percent in EBITDA between FY26 and FY28. With EBITDA margins showing a 58 basis point improvement to 20.8 percent last quarter, the firm’s ability to manage costs while expanding its footprint remains a key metric for analysts to check.

Why it matters

The divergence between Bajaj Auto’s domestic and export performance is a microcosm of the broader Indian auto sector. As the industry grapples with a temporary cool-off in local demand after a long festive and wedding-season high, the ability to pivot to overseas markets becomes a definitive competitive advantage. For investors, the takeaway is clear: the company is no longer just a domestic play. While the ‘Neutral’ stance from MOSL suggests that much of the optimism is already priced in, the company’s success in scaling its electric portfolio and maintaining premium margins in foreign markets will likely be the primary engines driving shareholder value in the coming years.