Key highlights from Bajaj Auto Limited (BAJAJ-AUTO) Q1 FY25 Earnings Concall
- Financial Performance
- Revenue from operations grew by 16% to nearly INR 12,000 crores.
- EBITDA reached 20.2%, crossing INR 2,400 crores with 24% growth.
- Third consecutive quarter of 20%+ EBITDA despite growing EV portfolio.
- Spares now constitute 11% of revenue.
- Financing penetration was 75% for motorcycles and 90% for three-wheelers.
- New Growth Platforms
- Recently launched three new platforms: CNG bike, sub-one lakh electric Chetak, and new plant in Manaus, Brazil.
- These platforms provide access to new business opportunities.
- Alliance to target middleweight segment in India and overseas.
- Development of e-auto (e-three-wheeler) to enter restricted three-wheeler markets.
- Company plans to continue creating and scaling up growth platforms.
- Export Market Challenges
- Small but steady revival in overseas markets, with fewer countries in stress conditions.
- Africa continues to underperform, especially Nigeria, due to currency devaluation and inflation.
- Sales in Nigeria dropped from 50,000 per month benchmark to under 5,000 in April, recovering to 15,000 levels.
- Company down by 40% in Africa compared to Q1 of previous year.
- Positive growth in Middle East, North Africa, Asia, and Latin America markets.
- Domestic Motorcycle Success
- Strong position in 125cc+ segment, which became 51% of overall industry.
- Market share of 25% in top half of the industry, just 2% short of leadership.
- 75% of sales coming from the top half, significantly impacting top and bottom lines.
- 40% market share in 150cc+ segment driven by Pulsar portfolio makeover.
- Launch of biggest Pulsar, NS400Z, well-received with 2,400 unit bookings
- CNG Bike Innovation
- Launched Freedom 125, world’s first CNG bike, to an enthusiastic reception.
- Offers 50% savings on fuel bill with dual fuel capability.
- Targets mileage-conscious customers in 100cc to 125cc segment.
- Addressable market of 450,000 to 500,000 customers per month.
- Phased launch starting with Maharashtra and Gujarat, expanding to Delhi and Kerala in Q2.
- Initial capacity of 10,000 units per month, scaling up to 40,000 per month by Q4.
- Electric Portfolio Growth
- Electric portfolio revenue in FY ’24 was four times that of FY ’23.
- 14% of domestic revenue now contributed by electric portfolio, which includes both electric three-wheelers and electric two-wheelers.
- Company committed to investing for competitive growth in this space.
- Plans to expand electric business significantly in the future.
- Commodity Cost Management
- Slight uptick in costs for aluminum, copper, rubber, and noble metals.
- Relief from steel, nickel, lead, and palladium prices.
- Cost reduction efforts and balanced commodity basket kept material cost impact neutral.
- Pricing remained flat overall, with ICE portfolio increases offsetting electric portfolio reductions.
- Current outlook suggests potential inflation in costs for Q2, especially in aluminum and copper.
- Future Business Priorities
- Sustaining momentum in domestic business and winning in upcoming festive season.
- Recovering and increasing export volumes.
- Expanding capacity, capabilities, and network for new businesses and launches.
- Developing strategic growth enablers through wholly-owned subsidiaries.
- Managing P&L dynamically in the context of rising commodity costs.
- Potential investments in building new businesses while sustaining margins
- EV Revenue Breakdown
- 14% of Bajaj Auto’s domestic revenues come from the electric portfolio.
- Electric two-wheelers contribute 60% of the EV revenues.
- Electric three-wheelers make up the remaining 40% of EV revenues.
- Industry Outlook
- The overall two-wheeler industry is expected to grow by 6% to 8%.
- The 125cc+ segment is anticipated to grow faster than the industry average.
- Bajaj Auto aims to outpace industry growth in the premium segment.
- Capex Guidance
- Bajaj Auto expects capex to be in the range of INR 700-800 crores for FY25.
- A significant portion will go towards commissioning a new electric three-wheeler facility in Bharuch.
- The investment also includes building capabilities for the electric vehicle segment.
- CNG Motorcycle Launch
- CNG is available in 335 out of 500 top towns, accounting for 70% of the market.
- CNG station density varies significantly across locations.
- Initial bookings are around 4,200, with 90% from Maharashtra and Gujarat.
- Majority of bookings are for the top-end model.
- Customer demographics are diverse, indicating broad appeal.
- Freedom 125 Capacity/Expectations
- The addressable market is about 400,000 to 500,000 units per month.
- Current capacity target is 40,000 units by year-end.
- The company is cautious about expanding capacity before assessing adoption rates.
- Substantial capacity expansion is possible with a six-month runway.
- Bajaj aims for a respectable market share in the bottom half segment.
- The company targets a 25% market share in the top half segment.
- Bajaj hopes to achieve a 40-50% market share by upgrading customers to the 125cc segment.
- Market Segmentation Trends
- The 150cc to 250cc category has shown recent growth after a period of shrinkage.
- Bajaj’s new N 250 model sold over 1,000 units in the previous month.
- There’s no significant evidence of down-trading from 350cc-400cc to 160cc segments.
- Within-brand migration to lower-priced variants may occur if products are very similar.