Why Bajaj Auto Share Price is Falling

The Indian auto industry is known for its rapid growth and evolving consumer preferences. With increasing demand for two-wheelers and electric vehicles (EVs), companies are constantly innovating to stay ahead.

Bajaj group company Bajaj Auto is one of the most reputed names in the Indian auto industry. It manufactures motorcycles, scooters, and three-wheelers and exports to over 70 countries.

The company is known for popular models like the Pulsar and Chetak. It has also made strides in the electric vehicle segment with its electric scooter, Chetak, aiming to capture the EV market.

At present, however, Bajaj Auto is facing headwinds. Its situation is similar to the quote - sometimes, just good isn't enough.

Yesterday, on 16 October 2024, Bajaj Auto posted a healthy set of quarterly earnings for the second quarter of FY25. And yet today, the stock is down over 12%.

Let's take a detailed look at the quarterly results to understand why Bajaj Auto share price is declining despite healthy numbers.

Disappointing Quarterly Results

In its quarterly results, Bajaj Auto posted a standalone net profit of Rs 20.1 billion (bn) for the September 2024 quarter. This reflected a 9% increase from Rs 18 bn in the same period last year. However, the street found this growth underwhelming.

Market experts expected higher profits however gross margins were disappointing due to a higher share of new products. These new launches offered lower profitability, putting pressure on margins.

The company's revenue from operations stood at Rs 132.7 bn, marking a 22% rise compared to Rs 108.4 bn in the same quarter last year. Even though this was Bajaj Auto's highest-ever quarterly revenue, it fell slightly short of market expectations.

The company's performance was also affected by lower average selling prices (ASP). This decline in ASP, combined with a drop in two-wheeler retail sales, raised concerns.

Bajaj Auto also lost market share in the fast-growing 125cc segment, compounding worries about its ability to sustain growth in key categories.

Additionally, a muted outlook for the festive season further dampened sentiment, as investors expected stronger demand during this period.

Following these mixed results, some domestic brokerages downgraded the stock. As a result, Bajaj Auto's share price fell over 12%.

In nutshell, investors were unimpressed with Bajaj Auto's quarterly results especially given the stock's strong rally earlier this year, with much of this performance seemingly already priced in.

What Next?

Bajaj Auto is strategically positioning itself for sustained growth in the upcoming quarters. The company's focus is on expanding its electric vehicle (EV) offerings and enhancing its existing product lineup.

This approach aims to address the increasing consumer demand for sustainable mobility solutions. The EV portfolio has already gained traction, contributing to 20% of domestic revenue. This trend is expected to grow as the company introduces new models.

In the commercial vehicles segment, Bajaj Auto plans to capitalise on the rising demand for three-wheelers and electric autos.

The company has noted a significant rise in sales, indicating a strong recovery in the market. Investments in capacity expansion are underway, which will enable Bajaj Auto to meet growing demand while maintaining efficiency.

The company is also enhancing its export strategy, particularly in Latin America, where it has reported robust growth. Continued investments in manufacturing facilities will support these expansion plans, with the aim of increasing production capacity significantly by FY26.

Additionally, Bajaj Auto is focusing on developing new growth platforms such as CNG and electric two-wheelers, which are gaining popularity among consumers.

While the recent earnings call highlighted some challenges, the company remains optimistic about its future trajectory. The planned product launches and expansion into new markets are expected to drive revenue growth.

How Bajaj Auto Share Price has Performed Recently

In the past five days, Bajaj Auto share price has tumbled 14.5%. In the last month, it has slipped 14.7%.

The stock price has surged 52.2% in 2024 so far. Additionally, it has rallied 98.4% in the last one year.

The stock touched its 52-week high of Rs 12,772.2 on 27 September 2024 and a 52-week low of Rs 5,125.3 on 18 October 2023.

About Bajaj Auto

Bajaj Auto is an Indian multinational automotive manufacturing company based in Pune. It manufactures motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group.

It was founded by Jamnalal Bajaj (1889-1942) in Rajasthan in the 1940s.

Bajaj Auto is the world's third-largest manufacturer of motorcycles and the second-largest in India. It is the world's largest three-wheeler manufacturer.

Bajaj Auto runs 3 state-of-the-art manufacturing plants across India with an annual manufacturing capacity of 5 million units.

For more details about the company, you can have a look at the Bajaj Auto fact sheet and quarterly results on our website.

For a sector overview, read our automobiles sector report.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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