BAJAJ-AUTO - Bajaj Auto Limited Share Price

Bajaj Auto's management provided an optimistic outlook during the Q4 FY25 earnings conference call. They reported record revenue of INR 50,000 crores, EBITDA surpassing INR 10,000 crores, and profit after tax crossing INR 8,000 crores for the first time. The company aims for continued growth, specifically focusing on seven key initiatives for FY26, including:

1. Strengthening competitive positioning in the domestic 125cc+ motorcycle segment, targeting leadership.
2. Achieving above-market growth in exports, particularly in Latin America, where they aim for significant market share gains.
3. Accelerating new growth platforms such as Chetak, GoGo, Freedom, and the Brazilian business, with a focus on leading electric two-wheelers and three-wheelers.
4. Collaborating closely with KTM for a turnaround and enhancing operational performance.
5. Boosting spare parts business to deliver exceptional results.
6. Growing the KTM and Triumph brands based on strong fundamentals in India.
7. Balancing growth and profitability amid market volatility.

Management expects exports to grow at 15% to 20% year-on-year, supported by strong demand in about 30 key markets. They anticipate overall industry growth of 5% to 6% in FY26, particularly from the 125cc+ segment. In the commercial vehicles segment, they secured a 75% market share in ICE and doubled market share in the electric auto segment to 33%.

They are confident about electric two-wheeler growth due to the substantial market share increase of the Chetak brand, which rose to 25% in Q4 FY25, and anticipate further introduction of competitive products. However, challenges regarding rare earth materials for electric vehicles from China remain a concern.

1. Kapil Singh: What is your vision on operating the KTM business? Will it operate the same way as before, and is there a need for more capital?

   Dinesh Thapar: Our intent is to take control of KTM and revamp the governance framework as soon as regulatory approvals are in place. We'll focus on restoring competitive growth and financial viability. For working capital or capex needs, we will assess requirements after approvals, as we're not yet engaged in those discussions.

2. Kapil Singh: What has caused the slowdown in the domestic motorcycle market and potential product launches in FY '26?

   Rakesh Sharma: The slowdown originates from smaller urban centers affected by inflation. We aim to regain market share by launching feature-rich products in the Pulsar portfolio and an entry-level 125cc variant to enhance our competitive position.

3. Amyn Pirani: Would the entry-level 125cc product fall under Pulsar or another brand, and is there potential for another brand in this range?

   Rakesh Sharma: The branding will be finalized closer to the launch. The 125cc segment is significant, and we are analyzing how distinct sub-segments are to determine branding decisions.

4. Amyn Pirani: How should we think about the growth potential in the domestic 3-wheeler business?

   Rakesh Sharma: The 3-wheeler market requires robust last-mile mobility solutions. The e-Rick segment can grow significantly, but it will take time to capture the market, with FY '26 focused on building foundation and understanding customer responses.

5. Gunjan Prithyani: Can you give insights into electric 2-wheeler profitability now?

   Dinesh Thapar: We are nearing EBITDA breakeven for Chetak due to cost efficiency, although maintaining steady pricing is critical. The combination of the electric 2-wheeler and 3-wheeler growth is shifting the overall profitability positively.

6. Chandramouli Muthiah: What is your visibility on achieving 15%-20% export growth?

   Rakesh Sharma: We expect this growth quarterly over the previous year due to strong market positioning, especially in Latin America, as economies stabilize post-COVID, combined with revitalization in key markets.

7. Raghu Nandhan: What are the primary growth drivers behind the 15%-20% expectation for exports despite macro challenges?

   Rakesh Sharma: The stabilizing economic conditions and low motorcycle penetration in emerging markets like Africa and Latin America are key drivers for our growth expectation, aided by our strong market position and proactive branding strategies.

8. Vipul Agrawal: How is BACL assisting financing in the rural areas, and what's its market share?

   Rakesh Sharma: BACL operates independently with sound credit policies. It has a 40% penetration in motorcycles and 50% in 3-wheelers, facilitating seamless access to financing for Bajaj customers.

9. Amyn Pirani: What capital has been invested in BACL, and how much additional capital is needed in FY '26?

   Dinesh Thapar: BACL has seen a total capitalization of INR2,400 crores, with INR2,100 crores invested last year. We expect an additional INR1,200-1,400 crores requirement as we expand our footprint.