Bajaj Auto, Hero Moto downgraded, share price target cut by up to 37% by Jefferies

Brokerage firm Jefferies has downgraded shares of two-wheeler manufacturers Bajaj Auto Ltd. and Hero MotoCorp Ltd., and cut its price target significantly by up to 37% on Tuesday, April 22.

Bajaj Auto has been downgraded to “hold” from its earlier rating of “buy”, while Hero Moto has had a double-downgrade to “underperform” from its earlier rating of “buy”.

While Jefferies has slashed its price target on Bajaj Auto by 28% to ₹7,500 from ₹10,550, it has given a bigger target cut to Hero, slashing its price objective by 37% to ₹3,200 from ₹5,075 earlier.

The brokerage has cut its two-wheeler industry volume growth estimates for FY26-27 by six percentage points and two percentage points respectively, even as it still expects a 10% Compounded Annual Growth Rate (CAGR) over FY25-28.

India’s competitive landscape in the two-wheeler industry has changed significantly with TVS Motors’ market share hitting the highest level in 18 years, and exports hitting a new high. On the flip side, Hero’s market share in the domestic two-wheeler market is at a 20-year low, according to Jefferies.

Therefore, Jefferies has cut Bajaj Auto’s FY26-27 Earnings Per Share (EPS) estimates for Bajaj Auto and Hero Moto by 5% and 11% respectively and for TVS Motor by 2% to 3%.

Despite the downgrades to Bajaj and Hero, Jefferies has maintained its “buy” rating on TVS Motor, raising its price target to ₹3,225 from ₹3,050 earlier and on Eicher Motors, whose target has also been revised higher to ₹6,700 from ₹6,600 earlier.

The brokerage assumes the two-wheeler industry to grow at 8%, 11% and 11% respectively in FY26, FY27 and FY28.

Out of the 44 analysts that have coverage on Bajaj Auto, 30 of them have a “buy” rating on the stock, and seven analysts each have a “hold” and “sell” rating.

Among the 42 analysts having coverage on Hero MotoCorp, 25 of them have a “buy” rating, while 10 say “hold”. Seven analysts have a “sell” recommendation on the stock.

Shares of Bajaj Auto fell 1.5% on Tuesday to ₹8,128, having already corrected 36% from its 2024-peak of ₹12,774, while those of Hero MotoCorp are down 2% on Tuesday to ₹3,840. The stock is down 38% from its 2024-peak of ₹6,246.