Game Of Thrones: Bajaj Auto and Eicher Motors headed for face-off in mid-premium bike segment

• Eicher has underperformed the Nifty Auto Index by 24% this period, while Bajaj Auto shares are up 10%.
• Competition has gone up in the mid-premium segment with the entry of Triumph and Harley Davidson.
• Analysts divided on this face-off, as some bat for Bajaj while others stick with Eicher Motors.

Stock prices are a good indicator of all that’s likely to happen to a company in future and not just in the present. The diverging stock prices of two motorcycle majors – Bajaj Auto and Eicher Motors – are telling an interesting story. Over the last one month Bajaj Auto’s stock has rallied 10% while that of Eicher has risen by 3.3%, which is a modest increase in comparison. And the Nifty Auto Index has rallied by 5.2% in the same time.

So what’s happening to makers of two-wheelers in India? Competition is on the rise in the mid-premium segment, where Eicher has been a leader so far with its iconic Royal Enfield offerings. Bajaj Auto has launched the Triumph Speed 400 which provides 39.5 bhp of power with a 398-cc engine. Bajaj Auto stock has gotten a power boost due to the positive reviews the Triumph Speed 400 has received. Compared to the Harley or RE’s Himalayan and 350-cc offerings, the bike offers higher power.

Another two-wheeler major – Hero MotoCorp in collaboration with Harley Davidson – has launched the new X440 which provides 27 bhp power with a 440-cc engine. Both the bikes have received approximately 20-26K bookings since launch in early-July. Moreover, the Yezdi Adventure and the Jawa 42 Bobber have also added to the competition.

Competition in the mid-premium range of bikes in India is growing by the day and this is impacting stock prices too. Jeffries, research house, points out that the Eicher, although up 5% in 2023, has underperformed the Nifty Auto Index by 24% in this period. The report adds that it is time to “buy” it as it sees limited impact from competition launching new bikes in the past month and a half.

Like economists, analysts rarely agree on likely winners. While Jefferies has retained its faith in Eicher, BofA Securities has upgraded Bajaj Auto to a ‘Buy’ saying that FY25 looks promising for the company with new Triumph launches on the same platform lined up. “The product (Speed 400cc) clearly seems to be making a mark in large metro cities-design, specs & price stand out.. Scrambler 400cc launch in a few weeks and export markets expansion will be added catalysts and drive volumes. Our workings suggests that Triumph could add Rs 150-250/ share value to valuations (base to bull case).”

Why this may be temporary for Royal Enfield?

Royal Enfield has sold 69K bikes per month in Apr-Aug in India and has interesting launches lined up in the near future to plug the gap in the ~400-cc power battle. Firstly, it has the new Himalayan launch lined up – an adventure tourer which is expected to give 40 bhp of power, in-line with the new Triumph and the segment favourite, KTM 390.

Channel checks also suggest that RE has not seen any significant impact so far, even in cities where Harley and Triumph bikes are available. “We factor RE total volumes (domestic + exports) of 76K/85K/95K in FY24E/FY25E/FY26E,” argues the Jeffries report. It adds, “We retain Buy on EIM with revised PT of Rs 4,150 (earlier Rs4,000), valuing RE at 25x FY25E PE (earlier 24x).”

A wider portfolio to bank on

Royal Enfield has a much wider portfolio than its competition in the premium biking segment. This offers buyers options at multiple price points to enter the segment – all the way from 350-cc to 650-cc.

A new 650-cc bike, most likely to be called Shotgun 650, has also been spotted being road tested. Moreover, after the Himalayan 450, the market would expect RE to also upgrade its Scam 411 with the same engine.






A report by Axis Securities, after RE delivered its first quarter results, says that, “While the acceptance of the competitive products could pose a threat to RE, the >250cc segment itself could grow, thereby partially reducing the competitive intensity. Furthermore, the company has multiple products in the pipeline.” It too maintains a ‘Buy’ rating with a target price of Rs 3,800/share (From Rs 3,900/share).

The next few launches in the mid-premium to premium segment will be eagerly awaited by the market and biking enthusiasts alike. The rising competition should offer more choice to the Indian consumer while the market will like to see which bike maker vrooms ahead.