Synopsis: Brokerage firm UBS Group AG has taken a cautious view on the company’s stock, highlighting potential headwinds for the company’s three-wheeler business. While the firm remains a dominant player in this category, UBS has flagged that policy changes could create near-term uncertainties for demand in the segment.
The shares of the Automotive company majorly engaged in manufacturing two wheeler and three wheeler vehicles with well known brands like KTM, Pulsar and many more, declined up to 3 percent in a day’s trading after new regulatory developments.
With the market capitalization of Rs. 2,63,360 Crores, the shares of Bajaj Auto Ltd were trading at Rs. 9392 per share, plunged nearly 3 percent from day’s high of Rs. 9660 per share and is trading at a P/E of 29.4 where as industry P/E stands at 30
Why is UBS bearish on Bajaj Auto?
The Maharashtra government has scrapped the open permit system of autorickshaws with immediate effect. This system has been in place since 2017. Earlier, any person who bought an autorickshaw could apply for a permit after verification by the transport department. The Maharashtra government is planning to regulate the permit system in cities with a population of over 5 lakh after discussions with the Union ministry of transport. Maharashtra has 10 lakh autorickshaws currently, with over 1.9 lakh autorickshaws in Pune and Pimpri Chinchwad. There is an oversupply of autorickshaws, and drivers are not earning well.
Brokerage firm UBS Group AG has expressed bearish views on Bajaj Auto Limited and stated that the change in permit policy in Maharashtra may impact its three-wheeler business. Following the bearish views it has initiated a sell rating with a target price of Rs. 9,015, which is a downside of upto 6 percent from the previous close price of upto Rs. 9,606.
The brokerage firm stated that Maharashtra is one of the key markets for passenger three-wheelers highlighting that Maharashtra accounts for 17 percent of the Bajaj Auto’s domestic ICE three wheeler volumes and 15 percent of the overall three wheeler volumes and any restriction in issuing new permits may impact the rate at which new vehicle registrations take place and profitability as well since ICE three wheelers hold margins of over 30 percent.
As Bajaj Auto is already a major player in the domestic three-wheeler segment, the change in policy may impact its demand growth in the near term; however, it continues to enjoy exports and its dominant position in the three-wheeler segment.
Financials
Bajaj Auto Ltd is one of the leading players in the domestic market segment majorly engaged in manufacturing two-wheeler and three-wheeler vehicles. The company’s exports reached a run rate of 200,000 units per month in Oct ’25 and Q3 export reached 6,00,00 units after 15 quarters .EV segment contributes around 25 percent of the domestic revenues and has individually crossed Rs. 1000 Crores in revenue during Q3.
Domestic 2 wheeler and 3 wheeler sales increased to 2,32,581 units in Feb ‘26 from 1,83,415 units in Feb ‘25 raising nearly 27 percent and Exports increased to 2,15,678 units in Feb ‘26 from 1,68,656 units in Feb ‘25 raising nearly 28 percent and total sales increased to 4,48,259 units in Feb ‘26 from 3,52,071 units in Feb ‘25 making it to an increase of 27 percent
Year on Year analysis: Revenue from operations has increased from Rs. 13,169 Crores to 16,204 Crores, up 23 percent. Operating profit has increased from Rs. 2,751 Crores to Rs. 3,730 Crores, up 35.58 percent and net profit has increased from Rs. 2,196 Crores to Rs. 2,750 Crores, up 25.27 percent.
Quarter on Quarter analysis: Revenue from operations has increased from Rs. 15,735 Crores to 16,204 Crores, up 3 percent. Operating profit has increased from Rs. 2,829 Crores to Rs. 3,730 Crores, up 31.8 percent and net profit has increased from Rs. 2,122 Crores to Rs. 2,750 Crores, up 29 percent.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
