BAJAJ-AUTO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.3
| Stock Code | BAJAJ-AUTO | Market Cap | 2,69,378 Cr. | Current Price | 9,635 ₹ | High / Low | 9,941 ₹ |
| Stock P/E | 29.4 | Book Value | 1,100 ₹ | Dividend Yield | 2.18 % | ROCE | 37.6 % |
| ROE | 28.5 % | Face Value | 10.0 ₹ | DMA 50 | 9,314 ₹ | DMA 200 | 8,947 ₹ |
| Chg in FII Hold | -0.82 % | Chg in DII Hold | 1.29 % | PAT Qtr | 2,549 Cr. | PAT Prev Qtr | 2,480 Cr. |
| RSI | 59.8 | MACD | 75.6 | Volume | 2,04,631 | Avg Vol 1Wk | 3,93,071 |
| Low price | 7,088 ₹ | High price | 9,941 ₹ | PEG Ratio | 1.51 | Debt to equity | 0.00 |
| 52w Index | 89.3 % | Qtr Profit Var | 20.9 % | EPS | 327 ₹ | Industry PE | 30.0 |
📊 Analysis: BAJAJ-AUTO is a fundamentally strong company with excellent profitability metrics. ROCE at 37.6% and ROE at 28.5% reflect superior efficiency and shareholder returns. The company is debt-free, which enhances financial stability. EPS of ₹327 and consistent PAT growth (₹2,549 Cr. vs ₹2,480 Cr.) highlight strong earnings momentum. The stock trades at a P/E of 29.4, which is in line with the industry average of 30.0, suggesting fair valuation. PEG ratio of 1.51 indicates growth is reasonably priced. Dividend yield of 2.18% adds income attractiveness. Technical indicators (RSI 59.8, MACD positive) suggest bullish momentum.
💰 Entry Price Zone: Ideal entry would be in the ₹8,800 – ₹9,200 range, closer to DMA 200 (₹8,947), offering better risk-reward alignment.
⏳ Exit Strategy / Holding Period: For existing holders, a long-term horizon (3–5 years) is advisable given strong ROE/ROCE and consistent earnings growth. Consider partial profit booking near ₹9,900–₹10,000 (52-week high zone) unless earnings growth accelerates further to justify higher valuations.
✅ Positive
- High ROCE (37.6%) and ROE (28.5%) show excellent efficiency.
- Debt-free balance sheet ensures strong financial resilience.
- Dividend yield of 2.18% adds shareholder value.
- Consistent PAT growth and EPS of ₹327 support earnings visibility.
- DII holdings increased (+1.29%), showing domestic institutional confidence.
⚠️ Limitation
- Stock is trading close to its 52-week high, limiting immediate upside.
- FII holdings reduced (-0.82%), reflecting cautious foreign sentiment.
- PEG ratio of 1.51 indicates growth is priced at a premium.
📉 Company Negative News
- No major negative news reported, but valuation near highs may limit short-term returns.
📈 Company Positive News
- Quarterly profit growth (+20.9%) highlights strong operational performance.
- Dividend payout enhances investor confidence.
🏭 Industry
- Automobile sector trades at an average P/E of 30.0, in line with BAJAJ-AUTO’s valuation.
- Industry outlook remains positive with demand recovery and export growth.
🔎 Conclusion
BAJAJ-AUTO is a fundamentally strong and debt-free company with excellent ROE and ROCE. Long-term investors can hold with a 3–5 year horizon, while new investors should accumulate in the ₹8,800–₹9,200 range. Profit booking near highs is advisable unless earnings growth accelerates further.