Bajaj Auto Holds Key Support: SEBI RA Sees Long-Term Value Despite Recent Weakness

Despite recent underperformance and bearish retail sentiment, the stock holds key technical support and may test ₹8,750–₹8,800 levels, according to the analyst.

Bajaj Auto shares have fallen 5% in the last month, but SEBI-registered analyst Deepak Pal believes that it remains a fundamentally strong, dividend-paying stock suitable for long-term accumulation, especially on dips. 

Pal highlighted that the stock is holding above both its 14-day and 55-day Exponential Moving Averages (EMA) and is gradually moving towards testing its 200-day EMA.  

Throughout last week, Bajaj Auto traded within a range, showing steady support around the 55-day EMA, indicating buying interest at lower levels.  

Pal noted that the stock has been holding above the crucial ₹8,300 support zone while entering a correction phase. If Bajaj Auto sustains its upward momentum, it may soon test the ₹8,750-₹8,800 levels, which also coincide with its 200-day EMA.

Fundamentally, the company has a robust financial profile with a market cap of around ₹2.5-2.6 lakh crore, a P/E ratio of 32-35 times, ROE of over 24%, and virtually no debt, making it sound. 

Nearly 40% of its revenue comes from exports, highlighting its global strength. Bajaj Auto also offers an attractive dividend yield of around 3.5-4%, supported by strong cash reserves, Pal added. 

With increasing focus on the electric vehicle segment, particularly through its Chetak Electric brand, the company is positioned for long-term growth. However, risks include reliance on exports, domestic demand fluctuations in entry-level bikes, and rising competition from Hero MotoCorp, TVS, Royal Enfield, and EV players. 

Brokerage firm Kotak Institutional Equities maintained a ‘Sell’ rating with a target of 7.250, indicating a 15% downside on Monday, citing that their EV production may face a rare earth material shortage. 

Data on Stocktwits shows retail sentiment is ‘bearish’ on this counter since a week ago. 

Bajaj Auto shares fell 4% year-to-date (YTD).

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