BAJAJ-AUTO - Bajaj Auto Limited Share Price

In the Q1 FY26 earnings conference call, Bajaj Auto's management presented an optimistic outlook, highlighting robust performance despite a competitive environment. Key financials included a revenue of over INR 12,500 crores, an EBITDA of almost INR 2,500 crores, and a PAT of approximately INR 2,100 crores. The growth was presented against the backdrop of a volatile market, with notable performances in exports and commercial vehicles.

Management emphasized the following forward-looking points:

1. Exports Growth: The exports business was bolstered by a 16% volume increase compared to Q1 of the previous year, with the company achieving the highest ever retail in several markets outside Nigeria. Particularly, Bajaj grew by 27% in key overseas markets that account for over 70% of its emerging market opportunity. The sales from Bajaj Brazil reached 7,000 units, aiming for an annual capacity of 50,000 units.

2. Domestic Motorcycle Focus: While the domestic motorcycle industry remained flat, Bajaj Auto maintained a strategic focus on the 125cc plus segment, witnessing a sequential market share improvement of about 3 percentage points, reaching 15%. The strategic actions aim to differentiate and optimize resource allocation within segments.

3. Commercial Vehicles: The commercial segment achieved a remarkable performance with over 35% market share in e-autos, underpinned by the successful launch of the wide-body 3-wheeler targeted at semi-urban areas. The company plans to launch its e-rickshaw product in key markets by mid-August, aiming to capture a significant share in a fast-growing segment.

4. Electric Vehicles and Chetak: The electric 2-wheeler segment is witnessing increased penetration, with Chetak's market share rising to 21%, and several models now achieving EBITDA profitability. However, supply chain challenges persist due to rare earth magnet availability, expected to impact Q2 production.

5. Profitability and Capital Expenditure: The management reported a healthy free cash position of approximately INR 17,000 crores and a capex plan for the year of around INR 600 to 700 crores, aimed at enhancing both electric and ICE capabilities.

The management remains committed to a balanced strategy focusing on growth, profitability, and sustained competitive positioning, with projections of continued growth momentum for the remainder of fiscal year 2026.

Q&A Section Summary from Bajaj Auto Q1 FY26 Earnings Call

1. Question: "What is your understanding of what is driving the weakness in the domestic 2-wheeler market?"

   • Answer: We've seen a flattish market largely due to early monsoons affecting purchasing patterns and inflation in urban areas. Customers are postponing purchases, expecting better deals during festive seasons, driven by consumer behavior influenced by e-commerce strategies.

2. Question: "Can you provide an outlook on the export 3-wheeler market?"

   • Answer: Our growth is palpable across multiple markets like the Philippines and Latin America. A revival is evident, driven by strong private financing confidence, allowing for increased sales of 3-wheelers.

3. Question: "Regarding the ABS requirement for 2-wheelers, how does the industry view it?"

   • Answer: Implementing ABS will heavily impact our supply chain and cost. It's anticipated that it could take 12-24 months to adjust. We're engaging with the government to explore effective and cost-efficient safety solutions.

4. Question: "Could you discuss plans for a lower-priced 125cc model?"

   • Answer: We are actively developing a lower-priced entry into the 125cc segment, likely as a non-Pulsar brand. More details will be shared when we have a closer launch date.

5. Question: "What is the current situation with the electric vehicle supply chain?"

   • Answer: We're pressed by supply chain issues due to HRE magnet shortages. We predict a potential shortfall and are working on diversifying suppliers to ensure our EV momentum is restored.

6. Question: "Can you clarify the profitability of your electric 3-wheelers versus ICE vehicles?"

   • Answer: Our electric portfolio, including both 2-wheelers and 3-wheelers, is nearing a double-digit EBITDA margin, aided by improved product unit economics and better integration of R&D strategies.

7. Question: "What is your long-term outlook for electric 3-wheelers?"

   • Answer: We're optimistic about building our electric 3-wheeler market share, projecting sustained growth due to our competitive EV offerings and favorable market dynamics.

8. Question: "What's your view on the current rural market conditions?"

   • Answer: Rural markets are showing improvement, but deep rural areas lag behind. We still see the 125cc segment outpacing 100cc bikes in both urban and rural settings.

9. Question: "Can you update us on the BACL's current performance?"

   • Answer: BACL achieved a profit of approximately INR 102 crores this quarter, and we're anticipating strong growth, with a book size expected to grow to INR 18,000-19,000 crores.

10. Question: "What future innovations can we expect in the electric 2-wheeler segment?"

    • Answer: We continually invest in R&D to enhance our EV series. The Chetak has already transitioned to a new platform, contributing to better profitability and operational efficiencies in our electric offerings.