Bajaj Auto Ltd Q3 FY2024 Concall Summary

Key Takeaways

• Record profit, soft exports: PAT crossed the INR2,000 crores milestone on all-time high revenue and EBITDA, even as a delayed export recovery and Red Sea disruptions weighed on international volumes.
• Domestic motorcycles are the engine: Domestic revenue accelerated 50% YoY, with retail growing nearly twice the industry, powered by a 36% surge in the 125cc+ segment where Bajaj is now within striking distance of segment leadership.
• Pulsar is taking share and expanding the sports segment: Pulsar’s market share jumped 8pp to ~40%, driving the sports segment’s industry share from 12% to 15%; 70% of that delta growth came from Pulsar.
• Chetak’s EV scale-up is gaining traction: Retail market share rose from 4% in FY23 to 14% in December 2024, supported by a widening network, right-pricing, and a new premium variant, though management flagged that FAME subsidy resets could force competitive pricing and pressure margins.
• What to watch next quarter: Whether domestic momentum can match an “audacious” aspiration to equal the festive quarter’s volume, the pace of export recovery if Red Sea disruptions ease, and any margin impact from the INR4,000 crores buyback and commodity inflation.

Domestic Motorcycle Surge

• 125cc+ segment driving outperformance: Bajaj grew 36% in this segment versus the industry’s 13%, capturing a ~31% market share; the segment now accounts for 70% of Bajaj’s retail and half the industry.
• Pulsar’s market share leap: Pulsar hit ~40% market share in the 150-250cc sports segment, up from 32% in FY23, with all-time high quarterly sales of 400,000 units; the N-Series launch and Pulsarmania events in 100 cities with over 1 lakh participants fueled the gains.
• 125cc sub-segment strategy: Bajaj straddles the commuter and youthful ends of 125cc with Pulsar 125 and NS125, a dual-coverage approach management credits for outstripping industry growth by 6x; the rise of 125cc was anticipated early, as BS-VI cost increases made 150cc bikes pricier due to ABS requirements.
• 100cc segment avoided as a price war: Platina holds 10–12% market share, but Bajaj will not chase volumes by matching the leader on product and price; the strategy is to “invade from outside the segment” by pulling customers up into 125cc, with a new attempt expected as the next fiscal year unfolds.
• Domestic motorcycle profitability swing: The biggest absolute EBITDA improvement over two years has come from domestic motorcycles, entirely due to a portfolio makeover and richer mix, though exports remain more profitable overall, bolstered by improved dollar realizations.

Sharma: "Leaders generally get disproportionately rewarded by customers for meaningful improvements in successful models."

Export Headwinds & Recovery

• Recovery delayed by macro and Red Sea: Tight monetary and fiscal policies in key markets continue to suppress demand; Africa is at 50% of peak volumes and South Asia at 70%, with Nigeria’s sharp currency devaluation proving slow to correct.
• Red Sea disruption compounding the drag: Shipping interruptions have caused ~3-week delays to Latin America and parts of Africa, doubled freight rates for many destinations, and hit container availability in December and January; alternate routes are being arranged and ordering levels adjusted.
• Sequential improvement stalled: Management had expected 10% QoQ export improvement each quarter, but Q3 delivered only 2%; the Red Sea crisis is casting a shadow over the near-term trajectory.
• Export revenue held up on mix and realizations: Export revenue was ~\$450 million, growing ~10% YoY despite a 4% volume decline, aided by a better product mix and improved dollar realization.
• Brazil plant on the horizon: Ground has been broken on a new plant in Manaus, with production hoped to commence by the end of Q1, adding a new manufacturing footprint in a key market.

Thapar: "We'd like to sustain the momentum in the domestic business and look to make it about as big as the festive quarter that has just gone by. Going by historical trends, you will note, that's an audacious ask but an aspiration, nonetheless."

Electric Vehicles: Chetak & 3-Wheelers

• Chetak’s market share climb: Retail market share rose from 4% in FY23 to 14% in December 2024, driven by a widening footprint to ~160 cities, assurance of supply, and pricing now nearly equivalent to key competitors.
• New premium variant and Tec Pac: A new variant launched in the last days of Q3 adds a TFT display, improved top speed, and connectivity features via Tec Pac, addressing a prior feature gap.
• Network and volume targets: The network is expanding to 200 cities with 160+ exclusive stores covering ~80% of the high-speed EV market; sales reached the 10,000-unit mark in Q3, with a target to breach 15,000 in Q4.
• EV profitability still a work in progress: Lower lithium prices and R&D efforts have improved the margin profile relative to 6–9 months ago, but full benefits of battery cost savings are yet to be reaped; much of future profitability will depend on a fuller portfolio, better ASP, and scale efficiencies.
• FAME reset risk to pricing and margins: Management flagged that the big element to watch is what happens to industry pricing as FAME subsidies get reset; Bajaj intends to retain competitiveness, which “could mean that there might be an impact on pricing and therefore, margin.”
• Electric 3-wheeler scale-up: Expanded to 23 cities with December volumes over 1,800 units; achieved 50%+ market share within three months in every city entered; plans to scale to ~50 cities in Q4 and then to 200 cities.
• Chetak export entry on a 3-horizon plan: A cluster of countries is identified for entry within 9 months, another for 9–18 months, and a third beyond 18 months; management expects “some solid entries” in the first half of the new fiscal year.

Sharma: "The reception of our product and our proposition of 'Technology Nayi, Bharosa Wahi' is being received very well."

Triumph & KTM: Premium Play

• Triumph gaining traction: The Scrambler 400X accounts for ~50% of Triumph sales; December retail reached ~2,800 units across 40 cities, with up to 20% market share in key cities like Bangalore and Kerala where the brand has been present for 3–4 months.
• Supply chain now caught up: Triumph is available off-the-shelf with no order book; exports have commenced with over 6,000 bikes shipped.
• Footprint and capacity expansion: Plans to grow to over 100 cities by Q4 end, covering 50%+ of the market; capacity is being unlocked to reach 20,000 and then 30,000 units during the year, with stepped-up volumes expected from March–April onwards.
• Engagement over volumetric targets: Management declined to set a specific volume target, emphasizing that the priority is to make the Triumph brand “real” for customers through direct, high-quality on-ground engagement rather than chasing month-on-month volumetric goals.
• KTM’s Gen 3 Dukes and new Husqvarna range: The all-new Gen 3 Dukes received a “superb response,” and a new Husqvarna range was launched in January, broadening the premium portfolio.

Margins, Commodities & Capital Allocation

• EBITDA margin up 100 bps YoY to 20.1%: Improvement came from better realizations, dynamic cost management, and operating leverage, which more than absorbed competitive investments in scaling up electric scooters.
• Sequential margin improved 30 bps: Price-versus-cost gains and operating leverage benefits offset the adverse mix from growing scale of profit-dilutive electric 2-wheelers.
• No real pricing taken in the quarter: A small part of commodity cost savings was plowed back into reducing pricing on select domestic motorcycle models, Chetak, and export markets to reset competitive positioning.
• Commodity outlook turning inflationary: Overall favorable in Q3 with softening across the board, notably noble metals, but steel, lead, ABS, zinc, polypropylene, copper, and rubber are starting to inch up; management expects some inflation in the quarter ahead and will manage dynamically.
• INR4,000 crores buyback announced: Under the tender route at INR10,000 per share, in line with an updated dividend distribution policy that now includes buybacks alongside dividends; the postal ballot closes mid-February, with next steps through mid-March.
• Surplus cash position: Expected to close the year with over INR20,000 crores of surplus cash.

Guidance & Commitments

Key Metrics