Bajaj Auto Stock Soars 131% in 1 Year! Should You Buy Now? Experts Weigh in on Technical & Fundamental Outlook

Bajaj Auto’s stock has seen an impressive rise, jumping 131% over the past year. In 2024 alone, the stock has gained 76%, with positive returns in eight out of nine months. The stock added nearly 10% in September, making it the fifth month of continuous gains. It also rose by 12.7% in August, 2% in July, 4.4% in June, and 2.2% in May, although it saw a small drop of 2.7% in April. From January to March, Bajaj Auto’s stock had strong growth, rising 15.6% in March, 3.3% in February, and 12.5% in January.

Recently, Bajaj Auto’s stock hit a record high of ₹12,050 on September 18, soaring 146% from its 52-week low of ₹4,902.80 in October last year. With such a strong rally, the big question is whether this momentum will continue.

Earnings Performance

Bajaj Auto’s profit for the June quarter (Q1 FY25) increased to ₹1,988.34 crore, up from ₹1,664.77 crore in the same period last year. The company’s total revenue grew by 15.7% to ₹11,928.02 crore, driven by strong vehicle sales and record earnings from spare parts, which increased the average selling price. In this quarter, Bajaj Auto sold 11,02,056 vehicles, up 7% from last year. EBITDA (earnings before interest, taxes, depreciation, and amortisation) also rose by 24% to ₹2,415 crore, with an improved operating margin of 20.2%, compared to 19% last year.

The company attributed its growth to better pricing and cost cuts, which helped it offset the growing competition in the electric two-wheeler segment.

Technical View

Technical analysts agree that Bajaj Auto is in a strong uptrend. Om Mehra from SAMCO Securities noted that the stock is above its 20-day and 50-day moving averages, showing bullish momentum. However, he also cautioned that the stock’s daily and weekly Relative Strength Index (RSI) is overbought, meaning a short-term slowdown might occur. He suggests buying if the stock pulls back to around ₹11,000 to ₹11,200.

Osho Krishan from Angel One highlighted that Bajaj Auto has consistently hit new highs and remains in a strong uptrend. However, since the stock is in overbought territory, he advises monitoring support levels at ₹11,400 and ₹11,600. He suggests protecting profits as the stock rises.

Rajesh Palviya from Axis Securities mentioned that the stock is maintaining its strong uptrend across all timeframes, with rising trading volumes signalling continued growth. The stock has potential to move toward ₹12,300-₹12,580 levels in the coming weeks, but he advises keeping an eye on key support zones around ₹11,455-₹11,950.

AR Ramachandran from Tips2Trades agrees that Bajaj Auto remains bullish but suggests booking profits at current levels. He warns that a daily close below ₹11,319 could push the stock down to ₹10,500.

Fundamental View

On the fundamental side, domestic brokerage Motilal Oswal (MOSL) has a more cautious outlook, issuing a neutral rating with a target price of ₹10,705, implying a potential downside. MOSL noted that Bajaj Auto’s domestic two-wheeler sales are expected to grow by 7-8% in FY25, but this growth could slow in the second half of the year due to strong sales in the previous year. The brokerage also highlighted strong demand in Latin America and ASEAN markets but noted that weakness in Africa and Bangladesh could impact overall exports.

MOSL pointed out positives like the strong demand for Bajaj Auto’s 125cc Freedom model, plans for a new CNG bike launch, and growth in the electric three-wheeler segment. However, it raised concerns about weak performance from KTM and potential margin pressure due to product mix issues. Despite these concerns, Bajaj Auto remains optimistic about the future, with plans to increase production of the Freedom 125cc model and new electric vehicle launches in the pipeline.

MOSL has reduced its earnings estimates for FY25 by 6% due to KTM’s weak performance. The brokerage believes the stock’s recent re-rating, driven by market share gains and better margins, leaves limited room for further growth.

Conclusion

Bajaj Auto has experienced an impressive rally, supported by strong earnings and positive sentiment in both domestic and international markets. However, with the stock now in overbought territory, experts advise caution. Investors are recommended to monitor key support levels and consider booking profits. Although the stock’s long-term outlook remains positive, especially with its electric vehicle plans and international expansion, the pace of future growth will depend on how the company manages competitive pressures and maintains its performance.