Detailed Narrative
Q1 FY26 Financial Performance Overview
Bajaj Auto reported a robust start to FY26 with a top line exceeding INR12,500 crores, EBITDA of almost INR2,500 crores, and PAT of approximately INR2,100 crores. EBITDA grew 3% year-on-year to INR2,482 crores, with a margin of 19.7%, reflecting a sequential moderation of 50 basis points. PAT was up 5% year-on-year to INR2,100 crores, marking the second highest PAT delivery to date, demonstrating underlying resilience.
Strong Export Recovery and Premiumization
The Exports Business Unit (BU) saw a 16% volume growth in Q1, achieving its highest ever retails outside Nigeria and highest ever commercial vehicle exports. Bajaj Auto outpaced industry growth in 25 out of 30 top overseas markets, growing 27% against an industry growth of 17%. Premium brands like Dominar and Pulsar contributed to enriching the mix, with Pulsar growing over 21%, positively impacting revenue and EBITDA.
Domestic Motorcycle Market Strategy
The domestic motorcycle industry remained flattish year-on-year in Q1, with the 125cc plus segment outperforming the 100cc segment. Bajaj Auto improved its market share in the 125cc+ segment by 3 percentage points sequentially to 15%. The company will continue to focus on growing its share in this segment through product interventions and tactical support, while the 100cc segment's support will be based on profitability impact, potentially leading to a slight decline in overall market share.
Electric Vehicle Business Surges with Improved Profitability
Bajaj Auto achieved leadership in the e-auto segment with over 35% market share. Its Chetak electric 2-wheeler volumes more than doubled year-on-year, increasing its market share to 21% from 12% in Q1 FY25. The entire EV portfolio (both 2-wheelers and 3-wheelers) is now nearing a double-digit EBITDA margin, with some Chetak models becoming EBITDA positive due to new platform adoption, localization, and improved unit economics.
EV Supply Chain Challenges and Mitigation
The EV business faced significant supply chain headwinds due to the HRE magnet issue, resulting in production shortfalls of 50% for Chetak and 25-30% for e-autos in Q1. Management is actively pursuing multiple options, including working with authorities to reopen flows and developing alternate sources, expecting short-term resolution and complete derisking of the supply chain within six to nine months.
Probiking and Financial Services Performance
The premium motorcycle BU, comprising KTM and Triumph brands, sold nearly 26,000 units in the domestic market, marking a strong 20% year-on-year growth. Bajaj Auto Credit Limited (BACL), the 100% subsidiary, had an excellent quarter with a PAT of INR102 crores and AUM of INR12,000 crores. Bajaj Auto infused an additional INR300 crores into BACL this quarter, bringing its cumulative investment to INR2,700 crores.
Commodity and Currency Outlook
Management anticipates some cost pressures from commodities like aluminum, platinum, copper, and rubber in the next quarter. However, ongoing cost reduction programs and pricing actions are expected to offset these, leading to a flat cost-versus-price quarter. The currency is expected to be a tailwind for the next quarter, and overall margins are projected to trend back towards FY25 average levels.