Bajaj Auto Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Exports roared back, KTM a footnote: Exports crossed 500,000 units for the first time in two years, with broad-based growth led by Latin America and a doubling in Nigeria. KTM exports collapsed to just 2% of the total, masking what would have been near-double-digit revenue growth.
• Margins held at 20.2% for the sixth straight quarter: A favorable currency and judicious pricing offset an adverse mix from the KTM drag and EV investments, keeping EBITDA margin flat YoY.
• The EV portfolio hit combined EBITDA breakeven: Electric three-wheelers are already profitable at the unit level, and the new Chetak 35 Series now has a line of sight on unit-level breakeven, moving the entire portfolio from cash loss to marginal profit.
• Deliberate share loss in entry-level motorcycles: Management chose not to match competitor discounting that pushed entry-level bike prices to an all-time low of ₹65,000, accepting a temporary market share hit in the 100cc segment to protect margins.
• What to watch next quarter: Whether the KTM reconstruction package is approved by the 25 February deadline, the pace of Chetak 35 Series scale-up toward profitability, and any currency-driven disruption to the export recovery.

Export Recovery

• Volumes crossed a two-year high: Exports surpassed 500,000 units in the quarter, with growth broad-based across regions. Africa returned to positive growth, Nigeria alone delivered over 100,000 units (more than double the prior quarter), and Latin America was the single largest and fastest-growing region.
• The recovery was over and above channel destocking: The Nigeria surge came after Bajaj deliberately minimized channel partner exposure earlier, meaning the quarter's volumes reflect genuine retail demand, not restocking.
• Motorcycle taxis are the structural driver: Across Africa, Latin America and ASEAN, 99% of the use case is taxi, creating a fundamental need that gets interrupted only by macroeconomics, particularly currency devaluation that pushes up prices for new buyers.
• Management is cautious on sustainability: The recovery is real but fragile, contingent on currency stability in the coming weeks and months. The next 3 to 6 months should deliver 20%+ YoY growth, but beyond that visibility is limited.

Rakesh Sharma: "We are in positive growth territory, but I wouldn't say that we are completely out of the woods. Let's see what is the kind of currency system we will experience in the next few weeks and months. A lot depends on the stability in that area."

KTM: The Drag and the Timeline

• KTM exports collapsed to 2% of total exports, down from roughly 5% in FY24, as KTM AG entered a court-supervised self-administered reconstruction process in Austria. The drag on mix was severe: without it, revenue growth would have been nearing double digits and EBITDA growth in the mid-teens.
• A definitive resolution date is set: 25 February is the deadline for the reconstruction package to be approved and accepted by all stakeholders. Until then, exports will remain patchy. Management declined to comment on any potential investment by Bajaj, citing the listed-company process at Pierer Mobility AG.
• The India KTM business is unaffected: Roughly 6,000 units produced in India and sold through Bajaj dealerships face no disruption.

Dinesh Thapar: "I think it's a bit premature for us to comment on this because treated in the nature of an M&A transaction, there's a process which is being run at the moment. And since Pierer Mobility AG is a listed company, I don't think it would be right for us to make any comments."

Domestic Motorcycles: Choosing Margin Over Share

• The 125cc+ segment is where Bajaj is placing its bets: The upper half of the market is growing at over twice the rate of the 100cc segment, and management sees greater ability to gain share through product differentiation there. Nine new variants were introduced between December and March across the Pulsar, KTM and Triumph ranges.
• Entry-level share was sacrificed deliberately: Competitors cut entry-level bike prices to an all-time low of ₹65,000. Bajaj chose not to participate except in very small exceptions, recalibrating billing volumes to right-size channel inventory. Management called it "profitless growth" and a temporary impact.
• 125cc+ market share was stagnant in Q3: Aggressive discounting by competitors, particularly severe in October, prevented share gains even in the preferred segment. Management expects a succession of new products to expand share going forward.

Rakesh Sharma: "If there's any company which has the deep pocket, it is Bajaj Auto. But we feel that the profitless growth point always stares us in the face in the conference room. So, we have chosen not to participate."

Electric Vehicles: The Breakeven Inflection

• The combined EV portfolio (2W + 3W) reached EBITDA breakeven in totality, moving from a cash loss a year ago to a marginal profit this quarter. Electric three-wheelers were already profitable at the unit level; the drag from Chetak was covered by the growing profit pool from e-autos.
• The Chetak 35 Series is the profitability catalyst: Launched in late December, the new platform has a line of sight on unit-level EBITDA breakeven. Production scales up from February, and the major swing into profitability is expected in Q4. More models on the 35 platform are coming in Q4 and Q1.
• E-auto market share surged from 13% to over 35% YoY, with the portfolio now available in 800+ locations. A larger passenger-plus-cargo variant is launching in Q4, and the entire e-auto range is being rebranded under the new "Bajaj Gogo" name.
• Cost reductions and PLI accruals funded competitive pricing: Procurement and R&D teams delivered cost improvements that, together with PLI incentives, offset the price reductions needed to compete, particularly in Uttar Pradesh. PLI accrual lead times are improving, providing more comfort on timing.

Rakesh Sharma: "With the launch of the new Chetak platform, the 35 Series that we launched in December, the unit economics for the new Chetak model is now seen a line of sight on an EBITDA breakeven."

Freedom CNG Motorcycle: Steady, Not Explosive

• Nearly 50,000 units retailed since the August launch, with customer adoption validating the product's conceptual benefits. Growth is now steady and step-by-step, driven by word of mouth rather than the initial explosive burst.
• Adoption is binary, determined by CNG pump density: In areas like Delhi and Kerala where density is roughly 40 vehicles per pump, penetration exceeds 10% of the 125cc segment. Where density drops to roughly 100 vehicles per pump, adoption halves because the savings of roughly ₹1,000 per month do not justify the inconvenience of a distant refueling network.
• Q4 will see stepped-up mass engagement: The company plans to target high-usage cohorts directly, including gig workers, quick-commerce riders and fleet operators covering 200 to 250 km per day.

Rakesh Sharma: "We don't see an explosive growth. It started explosively, but now with a decent word of mouth stepping in, we see a steady step-by-step growth."

Margins, Mix and the Captive Finance Arm

• EBITDA margin held at 20.2% for the sixth consecutive quarter, within a tight 19.8% to 20.2% band. A favorable currency (dollar realization of 84.3 vs 83.8 in Q2) and judicious pricing offset the adverse profit mix from lower KTM exports. Commodity costs were largely flattish, with rubber inflation offset by softer metals.
• Bajaj Auto Credit Limited turned profitable in its first year, completing a pan-India rollout ahead of schedule. It now finances roughly 70% of Bajaj Auto's vehicles at the store level, up from roughly 60% two years ago, with an AUM of roughly ₹7,000 crores and a 98.5% on-time collection rate. Full financials will be disclosed at year-end.
• Bajaj Auto Technology Limited (BATL) is now operational: Formerly Chetak Technology Limited, the renamed and repurposed entity employs over 500 people developing technology across electronics, electric powertrains, hybrids, fuel cells and software. It will earn revenue through royalties and service charges from Bajaj Auto and partners.

Guidance & Commitments

Key Metrics