Detailed Narrative
Strong Q1 FY27 Performance Despite Headwinds
Bajaj Auto delivered its highest ever quarterly performance in Q1 FY27, with volumes reaching 1.4 million units, revenue at INR17,244 crores (up 37% YoY), EBITDA of INR3,596 crores (up 45% YoY), and PAT of INR3,000 crores (up 42% YoY). EBITDA margins expanded 10 basis points sequentially to 20.9% and 110 basis points YoY, driven by higher realizations, a richer product mix, and operating leverage. This robust performance was achieved despite significant challenges including intensifying commodity inflation, supply chain disruption🌐s, and a ransomware attack.
Strategic Focus on Premium and EV Segments
The company's growth was primarily driven by the electric two-wheeler and three-wheeler businesses, which now contribute 30% of domestic revenues with double-digit EBITDA margins, and the 150cc-plus motorcycle segment, which outperformed the industry by 1.5x. Chetak electric scooters grew 65% YoY and became EBITDA positive, while domestic KTM and Triumph volumes surged over 50% YoY. This strategic shift reflects the company's focus on higher-margin segments, even if it means ceding some market share in the lower-profitability 100cc segment.
Aggressive Product Offensive and Capacity Expansion
Bajaj Auto is undertaking a major product offensive, planning to launch an 'absolutely new 150cc Pulsar,' 10 facelifts across the 160cc-400cc range, a new 125cc Pulsar, and two new 125cc brands within the next six weeks and fiscal year. To support this growth, the company is expanding its overall capacity by 25%, from 7 million to 9 million units per annum, with specific focus on EVs, high-end motorcycles, and three-wheelers. EV two-wheeler capacity is set to increase from 50,000 to 60,000 units immediately.
Robust Export Performance and Market Share Gains
The exports business unit achieved a new high of 732,000 units and USD 735 million in revenue, accounting for 40% of Bajaj Auto's total revenue. The company significantly outpaced industry growth by over 2x in its top 30 markets, with African markets growing twice the industry rate and Latin American markets also showing strong performance. Three-wheeler exports reached a record 100,000 units, growing 70% and commanding over 65% market share from India. The company aims to push exports beyond 250,000 units per month.
Challenges from Inflation and Supply Chain
The quarter was marked by a 4.5% commodity inflation impact on revenue, with only about half offset by pricing actions, and broader cost pressures (components, labor, logistics) expected to fully impact Q2. Supply chain disruption🌐s, including industrial LPG curtailment, geopolitical issues, and manpower shortages, impaired availabilities by 10-15%, particularly for exports, high-end bikes, and EVs, leading to missed volume targets. The company acknowledged these as ongoing risks, with the rupee depreciation providing some cushion.
Strong Financial Position and Shareholder Returns
Bajaj Auto generated over INR2,300 crores in free cash flow, almost doubling YoY, with a cash conversion of 80% of PAT. The surplus cash stood at INR21,000 crores at the end of June. The company paid out INR10,000 crores in July through a combination of dividend and buyback, representing a 100% payout of last year's profit. Despite this payout, cash is expected to build back to INR15,000 crores by year-end, demonstrating strong liquidity and commitment to shareholder returns.
Bajaj Auto Credit Limited (BACL) Growth
Bajaj Auto Credit Limited (BACL) demonstrated strong growth, with total income crossing INR1,100 crores and PAT more than doubling YoY to INR227 crores. Its Assets Under Management (AUM) reached INR20,000 crores, growing over 70% YoY. BACL maintains a healthy capital adequacy ratio of 19% and an industry-leading return on equity of over 25%, contributing significantly to the consolidated results.