2025-05-22-Jefferies-巴贾杰汽车有限公司（BJAUT）_持有KTM多数股权带来灵活性_10页_603kb

Equity Research: Bajaj Auto Limited - Stake Acquisition in KTM

Summary

Current Rating: HOLD
Price Target (prev): ₹7,750
Target Change: -11% (previously +6%, now -21%)

Key Points

1. Corporate Action: Bajaj Auto intends to increase its effective stake in KTM (Pierer Mobility AG) from 37.5% to 75%.
2. Deal Value: This requires an investment of ₹8,733.75 crore (approx. €880mn). This includes ₹7,750 crore (approx. €80mn) for an additional equity stake and₹7750 crore/INR 7,500 (approx. €800mn) for debt infusion.
3. Deal Structure: The acquisition involves:
   • Acquiring the remaining ~50% stake from Stefan Pierer's entity (valued at €80mn/Rs7.8bn).
   • Providing total funding of €800mn/Rs78bn (including prior €200mn) to meet KTM's creditor obligations and restart operations.
4. KTM Analysis:
   • Possesses a strong global franchise in off-road motorcycles (major marquee brand).
   • Historically profitable with solid margins (15-16%).
   • However, faced operational challenges in 2024 (volumes fell 21%, EBITDA loss estimated).
5. Potential Synergies & Turnaround:
   • Bajaj aims to restructure the board, reconstitute PMAG, and explore operational and synergistic opportunities in India.
   • If KTM operations stabilize, the €800mn debt can be serviced from its cash flows.
   • Bajaj plans to enhance KTM's sustainable competitive advantage.
6. Investment Justification: The ₹85bn investment (~3.5% of Bajaj's market cap) is also supported by Bajaj's significant end-FY25 cash position (~47%).
7. Market View: Continued manufacturing presence in India for KTM models.
8. Valuation: Maintain Hold rating with a target price of ₹6,900 (-21% YoY). SENSITIVE (subject to results/RWA) Downside Scenario includes lower volumes, margins, and PE.
9. Coming Events: Bajaj's 4Q results due on May 29, which may provide more details on the turnaround plan.