Bajaj Auto Ltd Q1 FY2025 Concall Summary

Key Takeaways

• Record quarter, broad-based growth: Revenue grew 16% YoY, split evenly between domestic and export volumes, with record spare parts sales adding a third leg.
• Margins expanded despite EV drag: EBITDA margin rose 130 bps YoY to ~20%, driven by better realizations and cost reduction that fully offset the loss-making electric two-wheeler business.
• The Freedom 125 CNG bet is now live: Management believes the world's first CNG motorcycle could "redefine the motorcycle industry," with capacity ramping from 10,000 to 40,000 units/month by Q4.
• Electric portfolio is scaling fast but stays unprofitable: E-2W and e-3W now contribute 14% of domestic revenue; e-3W is already margin-neutral with ICE after PLI, but Chetak remains loss-making with no timeline for breakeven.
• What to watch next quarter: Freedom 125 initial dispatches and booking momentum, the 50-70 bps commodity cost headwind flagged for Q2, and whether export recovery broadens beyond the current small, steady revival.

Domestic Motorcycle: The Mix Shift Upward

• Top-half dominance: 75% of domestic sales now come from 125cc+ motorcycles, where market share has been rising sequentially since Q2 last year. The 150cc+ segment alone commands a 40% share, driven by the Pulsar portfolio makeover.
• Bottom-half erosion is deliberate: Slight market share loss in the entry-level 100cc segment (CT 100, Platina 100) came from non-participation in a "red ocean mini-season" in the north during April/May. The net effect is decimal points of overall share loss, not a structural shift.
• Premium segment (250cc–500cc) remains lacklustre: Despite launches, the category has not picked up; management attributes this to possible fatigue on the classic side and dependence on a dominant player to develop the segment. The sporty commuter 150cc–250cc band is showing better traction.
• Industry outlook: Management expects 6%–8% industry volume growth, with the top half (125cc+) growing much faster. Bajaj Auto intends to grow faster than the industry in that top half.

Freedom 125 CNG: The Portfolio Bet

• Launch and ramp-up: The world's first CNG motorcycle launched with a phased rollout starting in Maharashtra and Gujarat, then Delhi and Kerala within Q2. All-India bookings opened a couple of days before the call; initial dispatches of ~100 units have commenced.
• Capacity plan: Production starts at 10,000 units/month in Q2, scaling to 40,000/month by Q4. The key constraint is CNG tank supply; if six months of adoption data supports it, capacity can be expanded substantially.
• Platform, not a product: Freedom is positioned as a portfolio brand that can spawn variants on both higher- and lower-end sides. Management can respond quickly if a 100cc CNG variant is needed, though no specific date was given.
• Market share ambition: The goal is to take a slice of the bottom half of the market and bring those buyers into an expanded top half, climbing to 40%–50% market share in that redefined segment.

Rakesh Sharma: "There is good reason to entertain the thought that Freedom could redefine the motorcycle industry."

Electric Portfolio: Scaling With Discipline

• Revenue scale: From INR500 crore in FY23 (Chetak only), the electric portfolio grew 4x in FY24 and stepped up further in Q1. Electric now contributes 14% of domestic revenue.
• Chetak growth levers: Price trimming, network expansion (from 40–50 stores to a target of ~1,000 by September), supply chain assurance, and communication investment. Premium customers value the metal body, onboard charger, build quality, and reliability.
• Chetak profitability: The business remains loss-making. Cost reduction efforts have started delivering, and price drops plus volume expansion have been funded entirely by those cost reductions, so the expansion is not adding incremental drag. But management confirmed it "will still take some time to become profitable."
• Electric three-wheelers: Already profitable at margin parity with ICE three-wheelers after PLI benefit. The e-auto footprint expanded from 70 to 140 locations in Q1, setting up for over 50% QoQ growth. Management plans to extend into the e-rickshaw segment to become a full-range player across all fuels.
• PLI accrual commenced: First quarter of PLI recognition; DVA certification received for 7 vehicles (2 Chetak, rest e-3W). Chetak 2901 DVA certification is underway. PLI is recognized in revenue and flows through to EBITDA.

Dinesh Thapar: "The expansion of Chetak that is now happening is not coming in at an incremental drag. The drag that has been there in the base continues to stay."

Exports: Small, Steady Revival

• Recovery pattern: The number of countries in stress conditions is slowly reducing. Africa continues to underperform, led by Nigeria where currency stabilization has been seen but devaluation-led inflation has dented demand.
• Q2 outlook: Management expects Q2 exports to be better than Q1 and to continue on a growth path.
• Brazil plant commenced production: The new Manaus plant started in June with single-shift capacity of 20,000 units per annum, scalable to 50,000. In the medium term, management expects Brazil to be among the top 3 international markets.
• Triumph exports: The first phase of pipelining into 57 countries with homologation is now complete. Over 60,000 bikes have been sold across 57 countries in one year, contributing INR1,200 crore in revenue to Bajaj Auto.
• Triumph domestic: Good traction in metros and mini-metros where the brand is understood; outside those markets, brand awareness is limited. The task is to bring the brand to life through rides, digital, and local activation. The network is now in 100 locations, on track for 150 stores in H1.

Margins & Costs: Commodity Headwind Ahead

• Q1 margin walk: 130 bps YoY expansion led by better realization and cost reduction, more than offsetting the drag from the growing e-2W business. Sequential expansion of 20 bps QoQ came largely from an uptick in dollar realization.
• Commodity cost outlook: Management flagged potential inflation across several lines in the current quarter, most pronounced in aluminum and copper. The estimated impact is 50–70 bps; a price increase already taken covers about half of that.
• Cost reduction on EVs: In the last two quarters, price drops and volume expansion on the electric portfolio have been fully funded by cost reductions, keeping the drag contained at its base level.
• Other expenses step-up: Driven by higher CSR spend versus last year, variable costs and packing reflecting volume/activity increases, and extended warranty costs on the growing electric portfolio. Staff costs rose YoY on increments and additional staffing for capability-building, with no one-offs.
• Capex: INR700–800 crore planned for FY25, largely for commissioning a new electric three-wheeler facility in Waluj and other electric capabilities.

Dinesh Thapar: "In the last 2 quarters whatever price drops we've had to take on whatever volume that we have expanded the incremental impact of that has been utilized by the cost reduction."

New Businesses & Strategic Bets

• BACL (captive NBFC): INR505 crore infused in Q1. On track to reach 100% of markets and stores by March 2025; expected to add to financial results in the near term as scale builds.
• Triumph: Completed one year of sales with over 60,000 bikes sold. The KTM Cup reached an audience of 5.5 crore with 900 KTM owners from 114 towns. Q2 will see commencement of KTM big bike promotion, with sales from October.
• Yulu partnership: Bajaj Auto holds a little under 19% equity. Yulu is doing a stock adjustment to rebalance across cities; volumes are expected to step up in the current quarter based on early indications.
• Qute exports to Egypt: Shipments of 500 vehicles commenced in Q1.

Guidance & Commitments

Key Metrics