Bajaj Auto Ltd. issued a clarification on UBS’ claims that the bike maker had taken up a price cut on its recently launched CNG motorcycle, Freedom 125. The company has said that there has been no price cut on the bike’s top variant.

On Wednesday, UBS had claimed that Bajaj Auto had undertaken price cuts of up to Rs 10,000, just five months after the launch of the two-wheeler.

Bajaj said that the top variant of the Freedom 125 had seen no price cuts. It accounts for 72% of all Freedom 125 sales.

However, the base variant has seen price cut to the tune of Rs 5,000, and is now priced at Rs 90,000. The base variant accounts for 13% of sales.

The Freedom 125’s mid variant is now priced at Rs 95,000, compared to Rs 1,05,000 earlier. This indicated a Rs 10,000 price cut taken on this variant as stated by UBS earlier.

The company said that UBS’ report does not present a full and accurate picture and stated that dispatch numbers, as per the report, were incorrectly stated to be 80,000. As of Nov. 30, 2024, Bajaj has actually billed 67,000 units to dealers, it said.

The actual sales in this period stands at 40,000 units, Bajaj said. Of this, 33,000 units were registered on the VAHAN portal. Closing stock is well within the norm required for a two-tiered distribution, the company said.

UBS has retained a ‘sell’ rating on the stock with a target price of Rs 7,900 per share, indicating a downside of 12% from current price.

Demand Wavering?

Bajaj Auto has announced price cut of Rs 5,000 on the entry level and Rs 10,000 for mid-variant of the motorcycle.

UBS had said that since the launch, Bajaj has dispatched over 80,000 units of Freedom 125 to dealers. In comparison, according to the VAHAN database, the actual sales were of only 34,000 units. This indicates a significant inventory with the dealers, it had said.

The CNG motorcycle market is still nascent but the initial euphoria had been strong. While details and potential reasons for this cut are still awaited, the current disparity between the inventory with dealers and the actual sales cannot be ignored.

The management, while speaking to NDTV Profit, had guided a planned ramp up of production of the Freedom 125 to 30,000 units per month in the third quarter. This would subsequently increase to 40,000 units per month in the fourth quarter.

Going Forward

UBS also mentioned that some Pulsar variants have also seen price cuts post Diwali. They see potential downside risk to street estimates. The management had guided for sales growth to be around 6-8% in fiscal 2025. The company had mentioned that this had some upside risk.

Between April and November, the company has sold roughly 32 lakh units, a growth of 9% compared to the same time last year.

At the time of the CNG bike launch, Nomura had mentioned export potential of the CNG bike in markets like Egypt, Tanzania, Columbia, Peru which are strong CNG markets as well. This could be key to show growth going forward.

Other brokerages have had mixed views on Bajaj Auto. CLSA remains cautious on the increasing competitive intensity in the premium motorcycle and has a target price of Rs 7,000 on Bajaj Auto. While, Nuvama had a target price of Rs 13,200 post Q2 results and estimated that CNG/EV vehicles share should rise to 20%-plus in domestic two-wheelers in FY27.

. Read more on Business by NDTV Profit.Bajaj said that the top variant of the Freedom 125 had seen no price cuts.  Read MoreBusiness, Markets, Notifications 

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