Bajaj Auto (BAJAJ-AUTO)

FairStock Score: 55/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• Durable moat: Leading 2/3-wheeler franchise with 55.01% promoter holding aligning interests.
• Superior profitability: ROE of 26.00% and ROCE of 28.06%.
• Healthy growth: Sales growth 15.66%, profit growth 17.92%, and 5-year revenue CAGR of 12.95%; latest quarter profit ₹2,750 Cr on sales ₹16,204 Cr.
• Sound financial health: Current ratio 2.83, Altman Z-Score 7.72, and Piotroski F-Score 7/9.
• Shareholder return: Dividend yield of 2.11% at current price.

Concerns

• Very expensive on a Graham basis: P/E 31.17, P/B 7.81, Graham Number ₹2,957.78 vs price ₹9,551.40, and margin of safety -237.16%.
• Negative free cash flow of -₹2,459 Cr and EV/EBITDA of 191.98 raise questions about earnings quality and cash conversion.
• PEG ratio of 4.07 suggests growth is insufficient to justify the valuation.
• FairStock Score 49/100 is MIXED, and the wide 52-week range ₹8,198-11,860 indicates volatility.

AI Analysis

Let me look at Bajaj Auto through Graham's lens, not Mr. Market's optimism. The business quality is very real: ROE of 26.00%, ROCE of 28.06%, a current ratio of 2.83, a Piotroski F-Score of 7/9, and an Altman Z-score of 7.72 all point to a sound, well-managed franchise. Promoters hold 55.01%, so shareholder interests are aligned. Sales grew 15.66%, profit grew 17.92%, and the five-year revenue CAGR is 12.95%. The latest quarter added ₹2,750 crore net profit on ₹16,204 crore sales. These are the marks of a stalwart. But Benjamin Graham taught me that price is what I pay, value is what I get. At ₹9,551.40, Bajaj trades at 31.17 times earnings and 7.81 times book, while the Graham Number is just ₹2,957.78. The margin of safety is -237.16%. That is not an investment; it is a leap of faith. PEG of 4.07 tells me the 15-18% growth is already fully paid for. Also, free cash flow is negative at -₹2,459 crore, and the reported EV/EBITDA of 191.98 is far beyond what I can call conservative or comfortable. A wonderful business can be a poor investment when the entry price strips away safety. The FairStock Score of 49/100 is 'mixed,' and I agree. I would not be a buyer today, despite all the quality. I would wait for a more irrational price, and monitor whether cash generation finally catches up with reported profits.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer