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    Bajaj Auto

    BAJAJ-AUTO
    Automobile and Auto Components·28 Jan 2025
    Management Summary

    Bajaj Auto delivered a strong Q3 FY25, characterized by robust export growth and significant market share gains in its electric vehicle segments for both two and three-wheelers. The successful rollout and profitability of its captive finance arm, BACL, further bolstered performance. Despite challenges in the entry-level domestic motorcycle segment and a temporary drop in KTM exports, the company sustained healthy margins and continued strategic investments in EV technology and new product development.

    Highlights

    8

    • Revenue reached ₹12,807 crores, marking a 6% YoY increase.

    • EBITDA stood at ₹2,581 crores, up 6% YoY, with a consistent margin of 20.2%.

    • Consolidated PAT was nearly ₹2,200 crores, while stand-alone PAT exceeded ₹2,100 crores.

    • Exports volume grew by 27% in Q3, with Latin America (LATAM) contributing nearly 40% growth.

    • The electric vehicle (EV) portfolio achieved its highest ever market share, with EV market share in Commercial Vehicles growing from 13% to over 35%.

    • Bajaj Auto Credit Limited (BACL) reported a profit of ₹52 crores in Q3, having financed 520,000 vehicles with an AUM exceeding ₹7,000 crores.

    • The CNG motorcycle 'Freedom' retailed almost 50,000 units since its August launch.

    • The company maintained a surplus cash position of ₹15,000 crores, generating ₹3,000 crores in free cash flow for 9M FY25.

    Concerns

    1

    • KTM exports drop due to overseas issues

    What Changed2

    vs Q4 FY25

    Guidance items8 → 7 (-1)Risks discussed6 → 4 (-2)

    Key financials

    Single quarter

    07 metrics
    1. 01Revenue₹12,807 Cr+6%YoY
    2. 02EBITDA₹2,581 Cr+6%YoY
    3. 03EBITDA Margin20.2%
    4. 04PAT (Consolidated)₹2,200 Cr
    5. 05PAT (Stand-alone)₹2,100 Cr

    Segment breakdown

    Exports
    27% Volume Growth40% LATAM Volume Growth50% KTM Exports Drop35,000 Nigeria Retail Volume55.0% Nigeria Market Share
    Domestic Commercial Vehicles
    1,25,000 Retail Volume17,000 EV Units35% EV Market Share75% ICE Market Share
    Chetak Business Unit
    22% Market Share
    Green Energy Portfolio
    44% Share of Domestic Revenue
    EV Portfolio
    22% Share of Domestic Revenue
    Bajaj Auto Credit Limited (BACL)
    ₹52 Cr Profit5,20,000 Vehicles Financed₹7,000 Cr AUM70% Financing Market Share
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Liquidity

    Cash ₹15,000 crores

    Guidance & targets

    7
    CategoryTargetPriority
    Volume
    Exports Volume Growth
    20% plus
    		High
    Volume
    Domestic Motorcycle Industry Growth
    6% to 8%
    		High
    Volume
    Commercial Vehicles (L5) Industry Growth
    4% to 6%
    		High
    Profitability
    Chetak Profitability
    major swing into profitability zone
    		High
    Product Launch
    Modern e-Rickshaw Launch
    launched
    		High
    Pricing
    OBD 2B Price Hike
    about 1%
    		High
    Pricing
    OBD 2B Price Hike (Entry-level)
    closer to 2%
    		High

    KTM Reconstruction Package Approval

    by February 25, 2025
    CurrentPending approval
    TargetApproved by February 25th

    Why it matters

    Approval of the reconstruction package is crucial for the revival of KTM exports, which significantly impacted Q3 performance.

    And the great thing is that there is a very definitive timeline for that, which is by 25th of February.

    How to verify

    qa_highlights[topic='KTM Revival Timeline and Impact']

    Risks & concerns

    4
    RiskSeverity

    Currency-led volatility in export markets

    Need to be watchful of currency-led volatility, particularly in South Asia and Africa, impacting export sustainability. — Management acknowledged

    medium

    KTM exports drop due to overseas issues

    Almost 50% drop in KTM exports due to issues faced by KTM overseas, impacting revenue and EBITDA growth. — Management acknowledged

    high

    Competitive intensity in entry-level domestic 2W segment

    Company lost market share in the 100cc segment due to a deliberate choice to stay away from tactical pricing initiatives, impacting overall domestic market share. — Management acknowledged

    medium

    Muted growth post-festive season

    Post-festive season growth rates are muted as customers advance purchases, but management views this as a natural, temporary phenomenon with underlying growth of 6-8%. — Management downplayed

    low

    Q&A highlights

    8

    “And the great thing is that there is a very definitive timeline for that, which is by 25th of February. And once that thing has been approved and accepted by all the stakeholders, we should see some kind of a revival.”

    Management provided a specific date for the approval of KTM's reconstruction package, which is critical for the revival of KTM exports, a segment that saw a 50% drop this quarter.

    asked by Chandramouli

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Financial and Operational Overview

    Bajaj Auto reported a robust Q3 FY25 with volumes exceeding 1.2 million units, revenue of ₹12,807 crores (up 6% YoY), and EBITDA of ₹2,581 crores (up 6% YoY). The company maintained a strong EBITDA margin of 20.2% for the fifth consecutive quarter. Consolidated PAT reached nearly ₹2,200 crores. Exports saw a significant 27% volume growth, with Latin America growing by almost 40%, despite a 50% drop in KTM exports. The green energy portfolio, including EV and CNG, now constitutes 44% of domestic revenue.

    02

    Strategic Focus on Electric Vehicles and Green Energy

    The EV portfolio achieved its highest ever market share, now accounting for 22% of domestic revenue. In commercial vehicles, EV market share surged from 13% in Q3 FY24 to over 35% in Q3 FY25, with 17,000 EV units sold. The new Chetak 35 platform, launched in December, is expected to drive a 'major swing into profitability' for the Chetak business in Q4. The company plans to launch a modern e-Rickshaw by the end of FY25 and introduce more EV models in Q4 and Q1 FY26.

    03

    Domestic Motorcycle Segment Dynamics

    The domestic motorcycle industry grew by 8% in Q3, with the 125cc+ segment growing at more than double the rate of the 100cc segment. Bajaj Auto maintained its market share in the strategically important 125cc+ segment but experienced some erosion in the 100cc segment due to a deliberate decision to avoid tactical pricing initiatives. The company retailed almost 50,000 CNG Freedom motorcycles since August and plans to accelerate engagement in Q4.

    04

    Captive Finance Arm (BACL) Success

    Bajaj Auto Credit Limited (BACL) completed its pan-India rollout ahead of schedule and reported a profit of ₹52 crores in Q3. It now serves the entire two-wheeler and three-wheeler business in India, holding over 70% share of financing at Bajaj Auto stores. BACL has financed nearly 520,000 vehicles, building an AUM of over ₹7,000 crores, demonstrating strong operational rigor and collection efficiency of 98.5%.

    05

    Technology and Product Development Initiatives

    Bajaj Auto Technology Limited (BATL), formerly Chetak Technology Limited, has been repurposed as a pure technology company, employing over 500 people. BATL will focus on developing new tech in electronics, electric powertrains, and software, generating revenue through IP royalties and service charges to Bajaj Auto. The company is also refreshing its product lineup, with nine new variants of existing 125cc+ models introduced between December and March, and further refreshes planned for KTM and Triumph in Q4.

    06

    Capital Allocation and Liquidity Management

    The company reported a surplus cash position of ₹15,000 crores at the end of Q3. For the first nine months of FY25, Bajaj Auto generated ₹3,000 crores in free cash flow. Investments included ₹1,600 crores into the financing subsidiary (BACL) and ₹450 crores in capex, with two-thirds of the capex directed towards the electric portfolio, underscoring strategic investment in growth areas.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.