BAJAJ-AUTO - Investment Analysis: Buy Signal or Bull Trap?

Last Updated Time : 19 Sept 25, 2:16 pm

Investment Rating: 4.4

🏍️ Long-Term Investment Analysis: Bajaj Auto Ltd.

Bajaj Auto continues to be a fundamentally strong candidate for long-term investment, backed by robust profitability, low debt, and consistent earnings growth.

✅ Strengths

ROE: 28.5% & ROCE: 37.6% — exceptional capital efficiency, ideal for compounding returns.

EPS: ₹296 — strong earnings base supports valuation.

PEG Ratio: 1.54 — reasonable valuation relative to growth.

Low Debt (D/E: 0.03) — clean balance sheet enhances resilience.

Dividend Yield: 2.31% — attractive for long-term holders.

MACD: +162 & RSI: 58.7 — bullish technical momentum.

Price above 50-DMA & 200-DMA — confirms trend strength.

DII inflows (+1.09%) — domestic institutions are accumulating.

⚠️ Risks

P/E: 29.9 vs Industry PE: 33.4 — fairly valued, but not cheap.

FII outflows (−1.31%) — foreign investors trimming positions.

Volume below 1-week average — slight dip in trading interest.

EPS dip YoY: From ₹272.70 in 2024 to ₹262.40 in 2025

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🎯 Ideal Entry Price Zone

Accumulation Zone: ₹8,600–₹8,800

Near 200-DMA (₹8,604) and below 50-DMA (₹8,711).

Offers a technical cushion and better margin of safety.

🧭 Exit Strategy / Holding Period

If you're already holding Bajaj Auto

Holding Period: 3–5 years, ideal for long-term compounding.

Exit Triggers

ROE drops below 20% or PEG rises above 2.5 without earnings growth.

Price crosses ₹12,500–₹12,700 without EPS expansion (profit booking zone).

Sustained FII outflows or margin compression.

Partial profit booking near ₹12,500 is advisable if valuation stretches without fundamental support

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🪙 Dividend Perspective

Yield: 2.31% — enhances total return alongside capital appreciation.

Final dividend of ₹210/share announced in May 2025

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📌 Summary

Bajaj Auto is a high-quality, low-debt business with stellar return metrics and consistent earnings. It’s a solid long-term candidate if accumulated near ₹8,600–₹8,800. Monitor valuation and institutional flows for optimal entry and exit.

Sources

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The Economic Times

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Moneycontrol

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The Hindu BusinessLine

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