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Bajaj Auto
Our verdict on Bajaj Auto isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Exports to KTM resumed in May 2025 after being suspended in Q4 due to receivable risks associated with the restructuring process. (1 met, 1 in progress across 2 tracked commitments)
“We are on track to expand capacity to 50,000 units per annum this year.”
The launch has been slightly delayed from early July to the middle of August 2025 as the product has now completed extended testing. (1 revised, 1 met across 2 tracked commitments)
“Our product has now completed extended testing and will be launched in a few key markets by middle of August itself.”
Management maintains the 5% to 6% growth outlook for the domestic industry despite a flattish performance in Q1, citing seasonal factors and monsoon advancement as temporary dampeners. (1 in progress, 1 revised across 2 tracked commitments)
“We expect this growth momentum in the industry to continue and the motorcycle industry to continue to grow at, say, 12% to 15%.”
The company plans to expand the joint KTM-Triumph showroom network to over 100 outlets by March. — target: Over 100 showrooms
“We currently have about 50 KT showrooms operational and plan to expand these to over 100 by March.”
Complete derisking of the EV supply chain (HRE magnets) within six to nine months. — target: Complete derisking
“complete derisking should take about six to nine months.”
See the full cited Management analysis of Bajaj Auto
How durable is the business?
The EV portfolio (Chetak and E-autos) has reached a double-digit EBITDA margin for the first time, despite supply chain constraints causing a 50% shortfall in planned volumes for Chetak. (1 expanding)
“But what I do want to use the opportunity to call out is the fact that on the electric portfolio... in this quarter, we have hit a double-digit margin, EBITDA margin.”
The EV portfolio has expanded significantly, now contributing nearly 20% of domestic revenue compared to under 10% in the previous year. (3 expanding)
“the electric vehicle portfolio has moved from being under 10% of our domestic revenue to nearly 20% on a full year basis in the course of this current year.”
Exports are recovering with 20% volume growth in Q4, led by Latin America which now accounts for over 30% of total export volume. (3 expanding)
“Export revenues were about USD 600 million... Volumes crossed the 600,000 units a quarter mark.”
The distribution moat for the Chetak brand is expanding, now reaching over 3,000 points of sale to support its market leadership. (4 expanding)
“The scale-up was also supported by distribution network that expanded to nearly 450 exclusive Chetak stores and 4,000 points of sale across 800 cities and towns.”
Exports reached an all-time high in revenue and volume, growing 24% YoY. Growth is diversifying away from Nigeria toward LATAM (Colombia/Mexico) and other emerging markets. (1 expanding)
“The BU grew volumes by 24% in Q2 with exports of over 550,000 units. This delivered the highest ever quarterly revenue from exports.”
See the full cited Business Model analysis of Bajaj Auto
Where does growth come from?
The company is launching a massive product offensive for its Pulsar brand, with 15 total upgrades or new models being introduced over a 6-month period to regain leadership in the premium 150cc+ segment.
“Seven interventions between November and now in the form of upgrades and refreshes have been made in the last 2 months... with over 8 more such interventions being made in the next 4 months.”
The transition to full control of KTM (via Bajaj Mobility AG) is in the final regulatory stages, representing a new trend of line-level consolidation and operational turnaround for the European business. (2 new trend across 2 signals)
“Retail Finance, our 100% subsidiary, BACL, had an excellent quarter... has an AUM of over INR16,000 crores, and it has built a business driven by the twin pillars of digital first and robust operational management.”
The EV portfolio (Chetak and electric 3-wheelers) now contributes 14% of total revenue, showing significant acceleration from previous years where revenue was only INR 500 crores in FY23. (5 accelerating across 5 signals)
“In this quarter, a sizable 14% of the domestic revenue has been contributed by the electric portfolio comprising both electric 3-wheeler and electric 2-wheelers.”
The EV portfolio (Chetak and 3W) is showing a steady upward trend in financial contribution, now hitting double-digit EBITDA margins despite recent supply chain constraints. (1 steady across 1 signal)
“These collectively delivered almost 20% of domestic revenue but more importantly a double-digit EBITDA percentage in Q2.”
BACL is expanding its geographic coverage rapidly, currently covering 50% of Bajaj markets with a target to reach 100% by March 2025. (5 accelerating across 5 signals)
“About 50% of the Bajaj Auto markets and stores have now been covered by BACL. We are on track to reach 100% by March '25.”
See the full cited Future Growth analysis of Bajaj Auto
What could break the thesis?
The risk has intensified as KTM AG faced near insolvency due to high debt and inventory issues. Bajaj is now moving to take controlling interest (acquiring a stake in PBAG) to execute a comprehensive turnaround plan. (1 intensifying, 1 high-severity)
“Nigeria, our largest market, doubled sales in Q3 compared to Q2, though it continued to be negative compared to previous year Q3. Significantly, Nigeria's weight in our portfolio is now half of what it was last year”
The risk is easing as the company has achieved double-digit EBITDA margins in the EV portfolio (including 3-wheelers) despite subsidy changes, and is actively rationalizing costs to build organic margins. (1 easing, 1 intensifying, 1 high-severity)
“firstly, the absorption of the withdrawal of the PM E-DRIVE incentives in the Electric 3-wheeler segment. While the withdrawal occurred towards the later part of the quarter, the impact was meaningful at approximately INR23,000 to INR25,000 per vehicle”
The risk is easing as the top 30 overseas markets showed a healthy 26% growth in Q4, signaling a recovery from previous volatility. (3 easing, 1 intensifying)
“disruption in the emerging markets and dislocations is a way of life, right from banning, tariff, currency devaluation, shipping issues, etcetera.”
Commodity inflation is intensifying for the upcoming quarter (Q1 FY26) due to surging aluminum prices and the cost of new OBD IIb regulatory norms, expected to impact margins by nearly 1%. (3 intensifying, 2 easing)
“Noble Metals especially platinum, palladium and rhodium all saw sharp increases, whilst aluminium, copper, nickel and lead also continued to harden... we saw a net price versus cost inflation hit of nearly 50 basis points on the margin.”
Market share erosion in the 125cc+ segment (which includes Pulsar) is being actively countered. Share dropped from 26% in FY24 to 24% in FY25, but management reports marginal recovery starting April. (2 stable, 2 easing)
“Since quarter 4 of financial year '25, we have been quite challenged for market share even in the Pulsar heartland of 150cc plus segment. And this continued well into quarter 1 FY'26. The genesis of the weakness, I think, lay in the asymmetry of our new product and upgrade cycle compared to that of the key competitors.”
See the full cited Risk analysis of Bajaj Auto
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