Target: ₹7,310

CMP: ₹9,540.85

Bajaj Auto (BJAUT) has launched the first ever CNG-powered bike, Bajaj Freedom 125 with prices ranging from ₹95,000 to ₹1,10,000 (ex-showroom).

The bookings of ‘Freedom 125’ have started, with deliveries starting first in Maharashtra and Gujarat. The company has a production capacity of 20,000 units per month for the model.

We see the launch of world’s first CNG bike by Bajaj Auto as an achievement and a significant milestone for the company. We calculate the bike to have 40 per cent lower running costs compared to similar petrol motorcycles. We already see the electric motorcycle for the commuter segment as technologically challenging given the price constraints. The CNG motorcycle will make it more challenging for an electric motorcycle to succeed in the entry segment given its lower operating cost at an attractive price, in our view.

Also, CNG motorcycles add to disruption risks to the petrol-fuelled commuter motorcycle segment, along with EV scooters. We see Freedom 125 competing against Glamour 125, Super Splendor, Shine, Raider 125, Hero Xtreme 125R etc.

Given the product has 26% lower CO2 emission levels and 43 per cent lower NOX emissions, at some stage it could likely get favourable tax treatments. A key risk could be the already busy CNG fuelling stations getting further crowded, resulting in the overall attractiveness of the product coming down.