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    Bajaj Auto

    BAJAJ-AUTO
    Automobile and Auto Components·29 May 2025
    Management Summary

    Bajaj Auto delivered a landmark FY25 with record revenues, EBITDA, and PAT, driven by strong export recovery and significant gains in the electric vehicle segment. The company also outlined strategic moves to acquire a controlling stake in KTM's parent company to drive a turnaround. Despite a minor slowdown in the domestic motorcycle market in Q4, Bajaj is implementing countermeasures and expects continued industry growth in FY26.

    Highlights

    8
    • FY25 Revenue reached a peak of ₹50,000 crores, marking a 12% YoY growth.

    • FY25 EBITDA crossed ₹10,000 crores for the first time, with margins steady at 20.2% for all four quarters.

    • FY25 Profit After Tax (PAT) exceeded ₹8,000 crores, also a first-time achievement.

    • Q4 Exports volume grew by 20%, with Bajaj outpacing the industry in key overseas markets, growing 31% against an industry growth of 26%.

    • Electric vehicle segment (2W & 3W) revenue reached ₹5,500 crores in FY25, making Bajaj the largest electric 2 and 3-wheeler company in India.

    • Chetak electric two-wheeler market share rose from 13% in Q4 FY24 to 25% in Q4 FY25, becoming the number one electric two-wheeler brand.

    • Bajaj Auto announced its intent to acquire a controlling stake in Pierer Bajaj AG (PBAG) to turn around the KTM business.

    • A dividend of ₹210 per share was declared, totaling approximately ₹5,900 crores, representing a 72% payout ratio.

    Concerns

    2
    • KTM Financial Distress

    • Rare Earth Magnets Supply Disruption

    What Changed2

    vs Q1 FY26

    Guidance items10 → 8 (-2)Risks discussed9 → 6 (-3)
    Key financials

    Metrics

    10

    Periods

    2

    Q4

    4
    • Revenue from Operations
      ₹12,148 Cr
      YoY+6%
    • EBITDA
      ₹2,451 Cr
      YoY+6%
    • EBITDA Margin
      20.2%
    • PAT
      ₹2,049 Cr
      YoY+6%

    FY25

    6
    • Revenue
      ₹50,000 Cr
      YoY+12%
    • EBITDA
      ₹10,000 Cr
    • EBITDA Margin
      20.2%
    • PAT
      ₹8,000 Cr
    • Standalone PAT
      ₹8,151 Cr
      YoY+9%

    Segment breakdown

    Exports
    20% Q4 Volume Growth31% Bajaj Growth in Top 30 Markets18% Latin America Exports Growth470 Mn Q4 Revenue
    Domestic Motorcycles (125cc+ Segment)
    12% FY25 Industry Growth24% FY25 Market Share (Vahan)26% FY24 Market Share (Vahan)21% FY23 Market Share (Vahan)
    Commercial Vehicles (ICE)
    75% Market Share
    Electric Auto Segment
    60% FY25 Industry Growth33% FY25 Market Share17% FY24 Market Share
    Electric 2-Wheeler (Chetak)
    25% Q4 FY25 Market Share13% Q4 FY24 Market Share
    ProBiking (KTM & Triumph)
    1,00,000 FY25 Volume12% FY25 Volume Growth
    Spare Parts Business
    18% FY25 Growth₹1,566 Cr Q4 Revenue
    Electric Vehicle Business (Total 2W & 3W)
    ₹5,500 Cr FY25 Revenue20% Share of Domestic Revenue
    List

    Capital allocation

    5
    high confidence
    CategoryHeadline
    Capex

    ₹700 crores

    Debt

    Debt disclosed

    Dividend

    ₹210/share (final)

    Payout ratio 72.0%

    M&A

    Pierer Bajaj AG (PBAG)

    acquisition · pending regulatory · Consideration ₹NaN (cash)

    Liquidity

    Cash ₹17,000 crores

    Closing surplus cash balance of nearly INR17,000 crores, underscoring continued strength and resilience of balance sheet.

    Guidance & targets

    8
    CategoryTargetPriority
    Industry Volume Growth
    Overall Industry Growth
    5% to 6%
    Medium
    Exports Growth
    Exports Volume Growth
    15% to 20%
    High
    Bajaj Brazil Capacity
    Annual Production Capacity
    50,000 units
    High
    E-rickshaw Launch
    Launch Timeline
    early July
    High
    Domestic Motorcycles
    125cc+ Segment Market Share Position
    as close as possible to number 1
    Medium
    KTM Turnaround
    First Set of Results Showing Up
    next calendar year
    Medium
    Chetak Profitability
    EBITDA Breakeven
    line of sight
    High
    Chetak Cost Savings
    Next Flush of Cost Savings
    later part of current financial year
    Medium

    KTM Acquisition Regulatory Approvals

    Next 2-3 months
    CurrentPending
    TargetApprovals received

    Why it matters

    Completion of regulatory approvals is crucial for Bajaj to take control of KTM and implement its turnaround strategy.

    Once all the regulated clearances are received, perhaps in 2, 3 months, KTM and Bajaj will commence to work very closely and execute a comprehensive turnaround plan.

    How to verify

    capital_allocation.m_and_a[target='PBAG'].status

    Risks & concerns

    6
    RiskSeverity

    KTM Financial Distress

    KTM faced near insolvency due to downturn in e-bike business, stock build-up, and rising interest costs, impacting Bajaj's consolidated PAT by ₹900 crores in FY25.Management acknowledged

    high

    Rare Earth Magnets Supply Disruption

    Dependence on China for 90% of rare earth magnets, with potential production impact by July if regulatory approvals for end-use declaration are delayed.Management acknowledged

    high

    Domestic Motorcycle Market Slowdown

    Minor decline of 2% in Q4, particularly in smaller urban centers, attributed to inflation and reduced purchasing power.Management acknowledged

    medium

    USD INR Softening

    Emerging headwind for Q1 FY26, as lower USD INR realization will weigh on margins.Management acknowledged

    medium

    Commodity Inflation and OBD IIb Norms Cost Impact

    Expected ~1 percentage point cost impact in Q1 FY26 from material cost inflation and new OBD IIb norms, partially offset by pricing actions.Management acknowledged

    medium

    E-Rickshaw Ramp-up Challenges

    Anxiety about CNG pump availability and issues with filling pressure impacting the range for long-distance riders, slowing adoption.Management acknowledged

    medium

    Q&A highlights

    8

    “We cannot give effect to or getting actively involved at the moment. But it is very clearly our intent, as regulatory approvals come through... to look at this very, very differently. We've decided that we would take charge and that is the message that we sent out through the announcement that we put out on the 22nd.”

    Management confirmed strong intent to overhaul KTM post-acquisition but was constrained by pending regulatory approvals, indicating a waiting period for detailed plans.

    asked by Kapil Singh, Nomura

    3 min read7 chapters

    Detailed Narrative

    01

    Record Financial Performance in FY25

    Bajaj Auto achieved its highest-ever revenue of ₹50,000 crores in FY25, marking a 12% year-on-year growth. EBITDA also crossed the ₹10,000 crore milestone for the first time, maintaining a steady margin of 20.2% across all four quarters. Profit After Tax (PAT) reached a new high, exceeding ₹8,000 crores. The spare parts business demonstrated robust performance, delivering its highest-ever quarter and clocking an 18% growth in FY25.

    02

    Strong Export Recovery and Latin American Growth

    The exports business unit recorded a 20% volume growth in Q4 FY25, with Bajaj outpacing the industry in key overseas markets by growing 31% against an industry growth of 26%. Latin America, now the largest emerging market for motorcycles, saw exports grow over 18%. Bajaj Brazil achieved its highest-ever retail sales of 7,000 units in Q4, and the company plans to expand its annual production capacity in Brazil from 30,000 to 50,000 units by December 2025.

    03

    Leadership in Electric Vehicle Segment

    Bajaj Auto has established a strong leadership position in the electric vehicle segment. The E-auto segment's market share grew from 17% in FY24 to 33% in FY25, securing the number one position in electric autos. The Chetak electric two-wheeler also saw its market share increase from 13% in Q4 FY24 to 25% in Q4 FY25, making it the number one electric two-wheeler brand in India. The total electric vehicle business (2W and 3W) generated ₹5,500 crores in revenue for FY25.

    04

    Strategic Acquisition of KTM Controlling Stake

    Bajaj Auto's Netherlands subsidiary, BAIHBV, is in the process of acquiring a controlling stake in Pierer Bajaj AG (PBAG), the parent company of KTM. This involves a call option to purchase 50,000 shares for a maximum of EUR 50.65 million, subject to regulatory approvals expected within 2-3 months. The strategic intent is to take charge of the KTM business, implement a comprehensive turnaround plan, and leverage Bajaj's operational expertise to restore its performance.

    05

    Domestic Motorcycle Market Strategy

    The domestic motorcycle industry experienced a minor decline of 2% in Q4, though it grew 6% for the full FY25, primarily driven by the 125cc+ segment. Bajaj's market share in the 125cc+ segment saw an erosion from 26% in FY24 to 24% in FY25. In response, Bajaj is rejuvenating its Pulsar portfolio with six new variants, recalibrating prices, and expanding the penetration of its CNG Freedom motorcycle, which has retailed 60,000 units and achieved 10-11% penetration in CNG-dense areas.

    06

    Capital Allocation and Liquidity Management

    Bajaj Auto demonstrated prudent capital allocation, investing ₹2,100 crores in its captive finance arm, BACL, and spending ₹700 crores on capex in FY25, with 60% directed towards the EV business. The company returned ₹2,200 crores to shareholders through dividends during the year. A final dividend of ₹210 per share was approved, totaling approximately ₹5,900 crores, representing a 72% payout ratio. The company ended FY25 with a robust closing cash balance of ₹17,000 crores.

    07

    Supply Chain and Cost Headwinds

    The company faces a critical supply chain risk concerning rare earth magnets, with 90% sourced from China. Potential delays in regulatory approvals for imports could impact production by July. Additionally, Q1 FY26 is expected to see a cost impact of approximately 1 percentage point due to commodity inflation and the rollout of OBD IIb norms, although pricing actions are anticipated to offset 30-50% of this impact.

    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.