Shares of Bajaj Auto gained nearly 3 percent on October 28 after the two and three wheeler manufacturer reported better than expected earnings for the second quarter of FY27. The company's strong performance was supported by robust export growth, improving electric vehicle volumes and resilient profitability despite elevated commodity costs.

Bajaj Auto reported standalone profit after tax of Rs 3,354 crore for the quarter ended September 2026, marking a 35.2 percent increase from Rs 2,480 crore in the corresponding quarter of FY26. Revenue from operations increased 34.1 percent year on year to Rs 20,003 crore from Rs 14,922 crore, while EBITDA rose 37 percent to Rs 4,172 crore. EBITDA margin improved to 20.9 percent from 20.5 percent a year earlier.

The company's export business remained a key growth driver, with export volumes increasing 41 percent year on year. Bajaj Auto also reported strong momentum in its electric vehicle business, with EVs accounting for nearly 35 percent of domestic revenue during the quarter. The company plans to increase monthly Chetak production capacity to around 80,000 units by the fourth quarter from approximately 60,000 to 65,000 units currently.

Bajaj Auto's ability to maintain margins despite commodity inflation was also highlighted by brokerages. CLSA noted that currency movements, a richer product mix, higher production linked incentive benefits, calibrated price increases, operating leverage and cost reduction measures helped offset higher input costs.

JPMorgan upgraded Bajaj Auto to Overweight and assigned a target price of Rs 12,500. The brokerage cited better than expected EV volume and profitability, sustained export growth across Africa, Latin America and ASEAN, and the company's planned entry into new markets. JPMorgan also expects two new motorcycle platforms to be launched in calendar 2027 covering the 125cc to 250cc segments. It raised its FY27 to FY29 earnings per share estimates by 5 to 8 percent.

CLSA retained its Outperform rating and set a target price of Rs 13,446, implying significant upside from the previous closing price. The brokerage raised its FY27 and FY28 earnings estimates by 4 percent, while highlighting refreshed Pulsar models, planned motorcycle launches and higher Chetak capacity as potential drivers of future market share gains.

However, brokerages also flagged risks including further commodity cost inflation, potentially weaker currency benefits and the increasing contribution of electric two wheelers, which could place pressure on margins. Despite these risks, strong exports, EV growth and upcoming product launches continue to support the earnings outlook for Bajaj Auto.