Bajaj Auto, a potential re-rating candidate, says JP Morgan; check the target price

Bajaj Auto shares in Monday's trade (March 4) scaled to Rs 8,166.05, up 1.5 per cent over the previous close. The gains in the stock were spurred after brokerage firm JP Morgan continued with its 'overweight' call on the stock with a raised target price of Rs 8,900 from the earlier Rs 8,275.
 
The new revised target price implies a possibility of a run-up of up to 11 per cent.
 
The two-wheeler major delivered a strong performance in February, owing to a continued strength in domestic volumes. Further, there were initial signs of recovery in export volumes, the brokerage noted.
 
Export volumes improved in line with management's guidance of a gradual recovery. The foreign brokerage raised its FY24–26 EPS by 1-3 per cent.
 
Bajaj Auto, whose popular motorcycles include Bajaj Pulsar, Bajaj Dominar, and Bajaj Discover, reported sales of 36,367 commercial vehicles in the domestic market last month, as against 32,956 units a year ago.
 
Total sales (including exports) in the CV segment came in at 51,978 units, up 16 per cent on a year-on-year basis.
 
A higher EPS suggests greater value, as investors will be willing to pay more for a company's shares if they think the company has higher profits relative to its share price.
 
Further, the brokerage sees Bajaj Auto as a potential re-rating candidate as it delivers on market share improvement within internal combustion engines (ICE) and electric vehicles (EVs) and ramps up in the new addressable market of ultra-premium bikes through Triumph.