Geojit Financial Services has upgraded Bajaj Auto Limited to a BUY rating from HOLD, assigning a 12-month target price of Rs. 11,735, implying an upside potential of approximately 12% from the current market price of Rs. 10,460. The upgrade follows a strong Q4FY26 performance marked by robust domestic demand, accelerating export growth, improving electric vehicle penetration, and sustained profitability. Bajaj Auto delivered record quarterly revenue, healthy margin expansion, and strong earnings growth despite rising commodity costs. The company's leadership in motorcycles, three-wheelers, and electric mobility, coupled with premiumization trends and expanding international presence, positions it favorably for continued growth over the next two fiscal years.

Geojit Upgrades Bajaj Auto to BUY as Growth Engines Fire Simultaneously

Geojit Financial Services has revised its stance on Bajaj Auto Ltd. from HOLD to BUY, citing the company's broad-based growth momentum across domestic motorcycles, exports, commercial vehicles, and electric mobility. The brokerage has rolled forward its valuation framework and arrived at a target price of Rs. 11,735 based on 26x FY28 estimated adjusted earnings per share.

Bajaj Auto remains India's second-largest motorcycle manufacturer and the country's leading three-wheeler producer and exporter. Its diversified business model and growing global footprint continue to provide resilience against cyclical market fluctuations.

Record Quarterly Performance Highlights Operational Strength

The March quarter of FY26 was among the strongest in Bajaj Auto's recent history.

Standalone revenue surged 31.8% year-on-year to Rs. 16,006 crore, supported by healthy volume growth, a favorable product mix, and continued export recovery.

The company's operational leverage became evident as EBITDA climbed 35.6% year-on-year to Rs. 3,323 crore. EBITDA margins expanded by 60 basis points to 20.8%, demonstrating management's ability to preserve profitability despite inflationary pressures.

Profitability also remained impressive, with reported net profit rising 34% year-on-year to Rs. 2,746 crore, reflecting strong operating performance and improved business efficiencies.

Volume Growth Remains the Core Driver

One of the most encouraging aspects of the quarter was the broad-based increase in volumes.

Domestic demand benefited from improved affordability and favorable tax changes, while export markets continued to recover strongly. The balanced growth profile reduces dependence on any single geography and strengthens earnings visibility.

Commercial Vehicles and Exports Deliver Major Milestones

Bajaj Auto crossed an important milestone in FY26 as annual commercial vehicle volumes exceeded 500,000 units for the first time.

The company also recorded its highest-ever quarterly commercial vehicle volume during Q4FY26, registering growth of 28% year-on-year.

Latin America remained a standout performer, delivering its eleventh consecutive quarter of growth. Brazil emerged as a particularly strong market, with approximately 10,000 units sold during the quarter. Expansion of retail outlets, additional production capacity, and new launches helped Bajaj secure a top-five market position in Brazil during April 2026.

The rebound in KTM exports also provided an additional tailwind, supported by strong demand for adventure and street motorcycles.

Electric Mobility Becoming a Meaningful Profit Contributor

Bajaj's electric vehicle strategy is rapidly transitioning from a growth story into a profitability story.

The flagship Chetak electric scooter achieved its highest-ever quarterly retail sales, crossing nearly 100,000 units during Q4FY26. Market share improved to approximately 23%, highlighting growing consumer acceptance.

For the full fiscal year, Chetak generated nearly Rs. 4,000 crore in revenue and crossed the 500,000-unit milestone. The brand's distribution footprint now spans over 500 exclusive stores and more than 850 cities.

Importantly, management indicated that the combined electric two-wheeler and three-wheeler portfolio now contributes more than 20% of domestic revenue while generating double-digit EBITDA margins. Chetak itself has achieved EBITDA-neutral status, a significant milestone in the electric mobility journey.

Commodity Inflation Remains a Near-Term Challenge

Despite the strong outlook, management acknowledged increasing input cost pressures entering FY27.

Steel prices have risen approximately 15%, copper around 20%, while aluminum and certain noble metals have witnessed increases ranging from 35% to 45%.

These developments could increase raw material costs by roughly 3.5% to 4% of revenue.

However, Bajaj Auto has already implemented pricing actions during April and expects these measures to offset nearly 40% of the inflationary impact. Additionally, favorable currency realizations, premium products, and operational efficiencies are expected to cushion margins.

Financial Outlook Suggests Continued Earnings Expansion

Geojit forecasts sustained earnings growth over the next two fiscal years.

The projections indicate revenue CAGR in the low-to-mid teens, supported by premium motorcycles, export growth, and scaling EV operations.

Balance Sheet Strength Continues to Differentiate Bajaj Auto

Bajaj Auto remains debt-free and continues to generate strong returns on capital.

The company is expected to deliver Return on Equity of 30.7% in FY27 while maintaining healthy cash generation and strong liquidity ratios.

Its debt-free balance sheet provides flexibility to invest in product development, expand manufacturing capacity, strengthen global distribution, and reward shareholders through dividends and buybacks.

Investment View and Key Levels for Investors

Geojit's positive outlook is built on several structural drivers:

• Continued premiumization in motorcycles.

• Market-share gains in the 125cc and 150cc+ categories.

• Sustained export recovery.

• Rapid scaling of electric mobility operations.

• Strong balance sheet and industry-leading profitability.

Bottom Line

Bajaj Auto's Q4FY26 performance reinforces the company's ability to execute across multiple growth vectors simultaneously. While commodity inflation remains a watch point, the combination of premium motorcycle demand, expanding export opportunities, rising EV profitability, and a fortress balance sheet creates a compelling investment case. Geojit's upgrade to BUY reflects confidence that Bajaj Auto can sustain double-digit earnings growth while strengthening its leadership position in both traditional and electric mobility segments over the coming years.