Bajaj Auto Results: Bernstein, Motilal Oswal, JM Financial share their views on its Q3 performance

SYNOPSIS: Q3 FY26 delivered record revenue, profits and strong cash flows driven by exports and EV growth, after which brokerages turned cautiously optimistic while flagging domestic market-share and execution concerns.

During Monday’s trading session, shares of the flagship company of Bajaj Group, a two-wheeler and three-wheeler manufacturing company, are in focus on the stock exchanges. The company recently announced its Q3 FY26 results, and below is a closer look at its financial performance along with key brokerage views.

With a market cap of Rs. 2.62 lakh crores, shares of Bajaj Auto Limited hit an intraday low at Rs. 9,252 on BSE, down by over 2 percent, as against its previous closing price of Rs. 9,486. The stock has delivered positive returns of around 5 percent in the last one year, but has fallen by over 1 percent in the last one month.

Financial Performance & Key Highlights for Q3 FY26

Bajaj Auto Limited announced the financial results for the third quarter of FY26 on Friday after market hours, as per the latest regulatory filings with the stock exchanges.

For the quarter, the company reported a standalone revenue from operations of Rs. 15,220 crores (marginally below Bloomberg’s estimate of Rs 15,314 crore), reflecting a sequential growth of around 2 percent QoQ compared to Rs. 14,922 crores in Q2 FY26. Likewise, on a year-on-year basis, revenue grew around 19 percent from Rs. 12,807 crores recorded in Q3 FY25.

Revenue crossed the Rs. 15,000 crore mark for the first time, driven by record quarterly volumes and a richer product mix. Growth was supported by double-digit expansion across all key segments – domestic motorcycles, electric 2W, 3W and exports – fuelled by strong festive demand, GST-led momentum on the domestic market, and a sustained recovery on exports.

Net profit for the quarter hit a new high of Rs. 2,503 crores, indicating a significant increase of around 1 percent QoQ from Rs. 2,480 crores in Q2 FY26, as well as a rise on a year-on-year basis by nearly 19 percent from Rs. 2,109 crores reported in Q3 FY25.

Reported PAT stood at Rs. 2,503 crores (as against Bloomberg estimates of Rs 2,538 crores), after adjusting for a one-time exceptional impact related to the reassessment of employee benefit obligations following the revised definition of wages under the new Labour Codes notified in November 2025.

Operating performance remained robust, with EBITDA rising 22 percent YoY to Rs. 3,161 crore, beating estimates of Rs 3,134 crore, and scaling a fresh peak. EBITDA margins improved to 20.8 percent, expanding by 30 basis points QoQ, supported by favourable currency movements and productivity improvement initiatives. These gains more than offset the company’s decision to absorb cost inflation during a strong demand environment and the margin impact from the highest-ever quarterly sales of electric 2Ws.

The company reported a track record of steady cash generation maintained with ~Rs. 5,200 crores of Free Cash Flow (FCF) being added in 9M FY26, representing a growth of over 70 percent YoY. The balance sheet remains healthy, with surplus funds of ~Rs. 15,000 crore, even after distributing Rs. 5,864 crore as dividends and infusing over Rs. 2,300 crore into subsidiaries to support initiatives such as the KTM Austria transaction and ramp up of the financing business.

Other Updates

The domestic business posted record revenues during the quarter, supported by strong performance across all segments and the largest-ever quarterly contribution from the electric portfolio. Retail sales hit historic highs, driven by sharp in-market execution during the festive season. The rapid expansion of the electric portfolio, which accounted for 25 percent of domestic revenues, was particularly notable, with its revenue surpassing the entire previous full year’s performance midway through the quarter.

On the export front, quarterly volumes crossed 6 lakh units after 15 quarters, while continuing to post robust double-digit YoY growth. This momentum was led by strong demand in Africa and Asia, while Latin America (LATAM) extended its run of market-leading performances to set another benchmark. The commercial vehicles business also maintained its upward trend, delivering ~80,000 units, representing growth of over 50 percent YoY.

Domestic motorcycles recorded their best-ever quarter in the 125cc+ segment, with double-digit revenue growth YoY supported by strong traction in the sports segment. The refreshed Pulsar portfolio, aided by product upgrades and focused activation initiatives, drove quarterly retail volumes to a historic high and strengthened competitive positioning in the strategically important 125cc+ segment.

Multiple Brokerage Views: Brokerages have shared a mixed but largely constructive view on Bajaj Auto, balancing strong growth drivers with a few near-term concerns.

Bernstein hit a positive tone, maintaining an ‘outperform’ rating on Bajaj Auto and raising its target price to Rs. 11,500 from Rs. 11,000, representing a potential upside of over 21 percent from its previous closing price.

The global brokerage said the company is at an interesting position, where several core growth drivers are firing even as historically weaker areas are seeing improvement. Bernstein highlighted the combination of strong earnings growth and reasonable valuations as factors that could leave room for further upside, with a favourable market position and strong demand for 3W vehicles.

In addition, exports remain a key strength, according to Bernstein, with a sharp recovery already underway and momentum expected to sustain. 3W exports, in particular, have returned to positive growth, helping Bajaj Auto diversify beyond the domestic market and reinforce its leadership in the segment. The brokerage also noted that e-scooter volumes continue to grow at a healthy pace, adding another leg to the company’s growth story.

Meanwhile, Motilal Oswal maintained a ‘Neutral’ rating on the stock with a target price of Rs. 9,416 per share, and highlighted that the recovery in exports and the healthy ramp-up in Chetak e-scooters and 3Ws remain positives. However, it flagged continued market share losses in domestic motorcycles, especially in the crucial 125cc and above segment, as a key area of concern. While the brokerage views Bajaj Auto’s acquisition of a controlling stake in KTM as attractive from a valuation perspective, it cautioned that the real test will be how quickly the company can turn around KTM’s operations. 

Finally, JM Financial echoed some of these concerns, noting that although Bajaj Auto has seen incremental improvement in the domestic 2W market share following recent product upgrades and refreshes, the current share of 10.5 percent still remains well below the 12.1 percent level seen in January 2024.

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