The country's third-biggest motorcycle maker by sales said festive season sales of motorcycles had grown only about 1%-2% so far this month, falling short of market expectations of 5%-6%.
This indicated that the season, which runs from October to November and when Indians generally make big-ticket purchases, would see sales growth of just 3%-5%, well below industry expectations of at least 8%.
The warning by Bajaj, the first automaker to report its results, weighed on the broader market (.NSEI), which fell 0.64%, as the forecast all but confirmed that high inflation, especially in food prices, forced consumers to limit expensive purchases in the roughly month-long season that started in early October.
"Contrary to our expectations, the festive season has started on a weaker note and we do see a downside risk to the domestic two-wheeler industry growth assumptions if demand trends do not see a pick-up during the Diwali festival," Kotak Institutional Equities said in a note.
The day's fall wiped out 333.89 billion rupees (nearly $4 billion) from Bajaj Auto's market cap, which is also India's top two-wheeler exporter.
The company's warning dragged down its bigger two-wheeler rivals Hero MotoCorp (HROM.NS) and TVS Motor (TVSM.NS) by about 5% each. The Nifty Auto index (.NIFTYAUTO) tumbled 2.8%.
While Bajaj Auto's quarterly profit growth and margins largely met expectations, analysts said the stock's current valuation appeared to have priced in all positives.
($1 = 84.0090 Indian rupees)
