BAJAJ-AUTO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:14 pm

Fundamental Rating: 4.3

📊 Financials: Bajaj Auto demonstrates strong fundamentals with ROE at 28.5% and ROCE at 37.6%, reflecting excellent capital efficiency. EPS stands at ₹313, supported by robust profitability. Debt-to-equity ratio of 0.00 indicates a debt-free balance sheet, ensuring financial stability. Quarterly PAT improved from ₹2,096 Cr. to ₹2,480 Cr., showing healthy earnings growth (+11.9% QoQ).

💹 Valuation: Current P/E of 28.8 is slightly below the industry average of 29.6, suggesting fair valuation. P/B ratio (~8.2) is elevated compared to book value of ₹1,101. PEG ratio of 1.48 indicates reasonable growth prospects relative to valuation. Intrinsic value appears close to current price, offering balanced risk-reward.

🏍️ Business Model: Bajaj Auto operates as a leading two-wheeler and three-wheeler manufacturer with strong domestic and export presence. Competitive advantage lies in brand strength, cost-efficient manufacturing, and diversified product portfolio. Global exposure in emerging markets adds resilience, though currency fluctuations remain a risk.

📈 Entry Zone: Attractive accumulation zone is around ₹8,500–₹8,700 (near DMA 200 support). Current price ₹9,002 is slightly above DMA 50 and DMA 200, suggesting consolidation. RSI at 41.4 indicates neutral momentum, while MACD (-9.13) signals mild weakness.

🕰️ Long-Term Guidance: Bajaj Auto is a fundamentally strong, debt-free company with consistent profitability and global reach. Valuation is fair, making it a solid long-term holding. Best strategy is to accumulate near support levels and hold for steady compounding, leveraging its strong brand and export-driven growth.

Positive

• High ROE (28.5%) and ROCE (37.6%) indicate excellent capital efficiency 💪
• Debt-free balance sheet ensures financial stability 💰
• Strong quarterly PAT growth from ₹2,096 Cr. to ₹2,480 Cr. 🚀
• DII holdings increased (+0.77%), showing domestic institutional confidence 📊

Limitation

• P/B ratio (~8.2) indicates overvaluation relative to book value ⚠️
• FII holdings decreased (-0.64%), reflecting reduced foreign investor confidence 📉
• Dividend yield at 2.39% is modest compared to global peers 💵

Company Negative News

• FII holdings decreased (-0.64%), showing reduced foreign investor interest 📉
• MACD (-9.13) indicates short-term weakness in momentum ⚠️

Company Positive News

• Quarterly PAT growth (+11.9% QoQ) highlights strong earnings momentum 🚀
• DII inflows (+0.77%) show strong domestic support 📊

Industry

• Automobile sector benefits from rising demand in two-wheelers and exports 🏭
• Industry P/E at 29.6 indicates fair valuation compared to Bajaj Auto’s P/E 📊

Conclusion

⚖️ Bajaj Auto is a fundamentally strong, debt-free company with excellent return metrics and consistent profitability. While valuations are fair, long-term prospects remain positive given strong brand equity and global exposure. Best strategy is to accumulate near ₹8,500–₹8,700 and hold for long-term compounding.