Shares of Bajaj Auto gained sharply in early trade, emerging as the top Nifty gainer after BofA Securities upgraded the stock to a ‘Buy’ rating, citing improving valuation comfort and favourable macro positioning within the auto sector.
The brokerage has set a target price of ₹10,700 on the stock, noting that current valuations at around 21x price-to-earnings appear reasonable. BofA highlighted Bajaj Auto as a relatively defensive play within the two-wheeler segment amid ongoing macro uncertainties.
The positive momentum in the stock also comes after a strong move in the broader auto pack, with the auto index rising around 7% in the previous session.
BofA Securities believes Bajaj Auto is well-placed due to better pricing discipline and supportive export dynamics. The brokerage noted that export growth and foreign exchange tailwinds could help offset potential domestic demand shocks. It also added that risks to net margins and earnings per share appear relatively lower compared to peers.
Interestingly, the brokerage pointed out that higher crude oil prices could act as a tailwind for Bajaj Auto’s exports to key markets such as Africa, particularly Nigeria, and could also support its electric vehicle business.
Alongside Bajaj Auto, BofA said it also prefers Hero MotoCorp due to valuation comfort and maintained a ‘Buy’ rating on Eicher Motors.
Reflecting the positive sentiment, Bajaj Auto shares were trading at ₹9,598, up ₹232 or 2.48% on the NSE. The stock touched an intraday high of ₹9,625 and a low of ₹9,366 in early trade, with an average traded price of ₹9,540.23.
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