Bajaj Auto Limited, India’s largest exporter of motorcycles, three wheelers and quadricycles, in its Q3 earnings call discussed robust export growth potential exceeding 20%, driven by Latin America, Africa, and select Asian markets. The company is strategically expanding into the e-rickshaw segment, targeting a monthly retail market of around 45,000 units by fiscal year-end. Its electric vehicle segment has progressed to marginally positive EBITDA, while the CNG bike business shows steady growth based on customer economics and network expansion. The management remains committed to the company’s international partnerships, including KTM, and is awaiting a court-supervised reconstruction process. Overall, the company is focusing on strategic segments with higher value and differentiation potential, balancing profitability with targeted growth initiatives.
Bajaj Auto reported robust financial performance with a 8% year-on-year increase in net profit and a 7.9% total revenue rise, slightly missing analyst estimates. The company’s growth was driven by multiple key factors, including strong exports, a thriving Green Energy portfolio now contributing 45% of revenues, and record performance in spares. The electric vehicle segment showed remarkable progress, with volumes reaching around 100,000. The Bajaj Chetak emerged as India’s best-selling electric scooter in December. Premium brands Triumph and KTM performed exceptionally well, with Triumph delivering its highest-ever quarterly retail volumes. Commercial vehicles and electric three-wheelers saw substantial growth, with three-wheeler volumes surging 5x year-on-year and Chetak electric scooter volumes increasing 2.5x. Despite a competitive market and a deliberate decision to avoid deep price discounting, Bajaj Auto maintained its market share in the 125cc+ segment, with two-wheeler sales marginally increasing from 1,040,193 to 1,054,621 units.
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Financial/Operational Metrics:
- Total Revenue: INR13,516 crore, up 7.9% YoY.
- Net Profit: INR2,195 crore, up 8% YoY.
- Basic EPS: INR78.7, up 9.4% YoY.
- Total Expense: INR10,640 crore, up 7.9% YoY.
- Total Units Sold: 12,24,472, up 2% YoY.
Outlook:
- Export Growth Target: 20%+ YoY increase expected.
- Commodity Costs: Slight inflation expected in alloys, noble metals (rhodium, palladium, platinum).
- EV Expansion: Chetak 35-Series scale-up from Feb. onwards and New e-Rickshaw launch by fiscal year-end.
Analyst Crossfire:
- Export Growth & Market Outlook, KTM Export Challenges & Revival Timeline (Chandramouli – Goldman Sachs): Bajaj Auto expects 20%+ export growth in the next 3-6 months, driven by strong positions in Latin America, steady sales in Nigeria (55% market share), and recovery in Sri Lanka and Africa. KTM exports have declined due to restructuring in KTM AG. A court-supervised resolution is expected by Feb 25, 2025, after which a revival is likely (Rakesh Sharma – Executive Director).
- Three-Wheeler Expansion & Pricing Strategy, New Two-Wheeler Launches for FY26 (Gunjan – Bank of America, Raghunandhan NL – Nuvama): Bajaj is introducing larger e-autos to cater to suburban & smaller towns, improving load capacity and gradability. Pricing adjustments were made in competitive regions like Uttar Pradesh to match industry trends. Bajaj will introduce 9 new variants across the 125cc+ segment and has a strong product pipeline for both ICE and EV models, ensuring continuous product refreshes every quarter (Rakesh Sharma – Executive Director).
- Potential GST Cuts for CNG Vehicles, Domestic Motorcycle Market Share & Entry-Level Pricing (Raghunandhan NL – Nuvama, Amyn Pirani – J.P. Morgan): The GST Council is reviewing SIAM’s proposal to reduce GST on CNG, flex fuel, and ethanol-based vehicles, with strong endorsements from multiple ministries. Bajaj’s 125cc+ segment share remains steady, but entry-level share declined due to non-participation in aggressive festive-season pricing. Market recalibration should normalize sales in the coming months (Rakesh Sharma – Executive Director).
- African Market Recovery & Sustainability, Chetak Buyer Profile & Market Expansion (Vipul Agrawal – HSBC Securities, Kapil – Nomura): The African market, particularly Nigeria, is seeing positive growth, but sustainability depends on currency stability. The demand for motorcycles as public transport remains strong, but macroeconomic factors like devaluation could impact new customer purchases. 70% of Chetak buyers are existing scooter users, making them incremental customers for Bajaj. While some motorcycle owners purchase it as a second vehicle, Chetak primarily cannibalizes ICE scooters (Rakesh Sharma – Executive Director).
- ICE Market Share & Competitive Positioning, Triumph Growth Strategy & Future Pipeline (Pramod Kumar – UBS Group, Kapil – Nomura): Bajaj maintains healthy dealer viability despite a stagnant 125cc+ market share. It avoided aggressive discounting during the festive season, opting for profitability over volume. Expansion in premium models and the Freedom CNG bike is key to future share growth. Triumph sales have stabilized at 3,000+ units per month, with brand awareness still growing beyond metro cities. Expansion will focus on new product launches, network growth, and organic brand recognition over the next 18 months (Rakesh Sharma – Executive Director).
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