BAJAJ-AUTO - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.1

Here's a deep dive into Bajaj Auto (BAJAJ-AUTO) based on the metrics you provided

📊 Fundamental Analysis

Strong Profitability Metrics

ROCE: 28.1% and ROE: 22.8% indicate impressive capital efficiency and profitability.

EPS: ₹262 supports strong earnings.

Valuation

Stock P/E of 31.1 aligns with Industry P/E, suggesting fair valuation.

PEG ratio of 2.99 is relatively high, implying slower growth vs. valuation — not ideal for aggressive long-term gains.

Balance Sheet

Low debt-to-equity of 0.27 boosts financial resilience.

Dividend Play

Dividend Yield: 2.58% makes it attractive for income-focused investors.

Recent Performance Concerns

PAT down 10.4% QoQ, slight concern unless trend reverses.

Negative MACD (-64.2) and RSI at 41.4 reflect mild bearish sentiment.

FII holding dropped 1.31%, while DII increased 1.09%, signaling mixed confidence.

📈 Technical Outlook & Ideal Entry Zone

Current Price: ₹8,128

DMA-50: ₹8,332, DMA-200: ₹8,553 — currently trading below major moving averages.

RSI (41.4) indicates it's nearing an oversold zone.

MACD shows bearish crossover.

🔽 Ideal Entry Zone: ₹7,300–₹7,600 This range offers a good margin of safety, especially if the stock re-tests its recent low of ₹7,088.

🧭 Exit Strategy / Holding Period

If you already hold the stock, this is a classic case for

Hold for long term (3–5 years) if your goal is stable growth + dividends.

Reassess if ROE, ROCE, or PAT show consistent decline over 2+ quarters.

Exit Signals to Watch

Sustained break below ₹7,000 with deteriorating financials.

PEG ratio continuing to rise without corresponding EPS growth.

Further institutional divestment or macro slowdown affecting auto sector.

🏁 Summary

Bajaj Auto is a financially sound company with strong ROE/ROCE and a decent dividend yield, but its current valuation seems stretched given the PEG ratio. If you're a long-term investor with a moderate risk appetite, it’s worth holding — or entering during dips into the ₹7,300–₹7,600 range.

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