Bajaj Auto Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Record year, export-led finish: FY25 revenue crossed INR50,000 crores for the first time, with EBITDA and PAT also hitting record highs. Exports surged 20% in Q4, offsetting a domestic motorcycle slowdown.
• KTM restructuring dominates the narrative: A conscious export suspension to manage receivables risk dragged headline revenue, but Bajaj now intends to acquire a controlling stake in KTM’s parent, with regulatory approvals expected in 2-3 months.
• Chetak turns the corner on profitability: The electric scooter business is now “very close to line of sight on being EBITDA breakeven,” and the overall electric profit pool has swung from a few hundred crores of loss to a marginal profit.
• Margins face a near-term squeeze: A softening USD, commodity inflation, and OBD IIb cost impacts are converging into a material headwind, with management expecting pricing to cover only 30-50% of the impact.
• What to watch next quarter: The pace of KTM regulatory approvals and export resumption, the trajectory of domestic 125cc+ market share recovery, and whether Chetak can hold pricing to achieve its breakeven milestone.

KTM: Restructuring, Control & Turnaround

• The crisis: KTM AG’s distress originated from a failed read of post-COVID demand volatility in extreme sports and a downturn in its e-bike business, leading to a stock and debt pile-up that pushed it near insolvency. Customer franchise remains intact.
• Bajaj’s protective action: Exports of KTM motorcycles from India were consciously suspended to avoid receivables exposure during the restructuring uncertainty, which weighed on headline revenue while the continuing business grew double-digit.
• Restructuring milestone met: Creditors accepted the restructuring plan in February, and the 30% quota of claims was paid by 23rd May 2025, clearing the way for Bajaj to consolidate and publish its own delayed results.
• Control intent declared: On 22-23 May, Bajaj announced its intent to acquire a controlling stake in Pierer Bajaj AG (PBAG), the KTM parent, subject to takeover commission, investment authority, and merger control approvals across key geographies.
• Turnaround ambition: Upon taking control, Bajaj will revamp the entire governance framework and deploy its system expertise to restore momentum, competitive growth, and financial viability, with synergies targeted in procurement and component sourcing. The joint development program may expand from 400cc up to 990cc.
• Timeline realism: Management has not yet started work on KTM, constrained by the regulatory process. CY25 will be about restoring operational continuity and customer engagement; the first results are expected to show only in the next calendar year.

Thapar: “It is very clearly our intent, as looking at control of the enterprise very clearly, we will initiate a revamp of the entire governance framework as to what will happen at that point of time.”

Export Recovery & Growth Visibility

• Broad-based rebound: Exports grew 20% in Q4, with 26 of the top 30 overseas markets growing and Bajaj outpacing them at 31%. Latin America exports grew over 18%, with over 65% premium brand mix.
• Structural drivers: The recovery rests on currency stabilization and macroeconomic certainty in emerging markets after a period of extreme dollar strength and devaluation. Low 2-wheeler and 3-wheeler penetration outside ASEAN, India, and China provides a fundamental growth runway.
• Bajaj’s outperformance: Early strategic moves in Latin America, including brand and channel strengthening while Africa remained subdued, have made Bajaj number one in the sports segment across Mexico, all five Central American countries, Colombia, Argentina, and Peru.
• Brazil scaling fast: The Brazil plant recorded its highest ever quarterly retails of ~7,000 units, more than all of FY24. Capacity has expanded from 20,000 to 30,000 units per annum, with a target of 50,000 by December.
• Forward visibility: Management expects exports to grow 15-20% year-on-year every quarter, driven by the penetration story and the impending resumption of KTM shipments from India once the restructuring stabilizes.

Sharma: “The rebound/growth in 3-wheeler exports is largely the result of Asia and parts of Africa coming back... Of the 30 countries monitored, 26 have grown in both 2-wheelers and 3-wheelers.”

Domestic Motorcycles: Share Erosion & Counterattack

• Where share was lost: Market share in the 125cc+ segment fell from 26% in FY24 to 24% in FY25, driven by the timing of competitive launches versus Bajaj’s own product cadence. The erosion was concentrated in a few months, not the full year.
• The slowdown backdrop: The domestic market softened in Q4, particularly in larger towns facing rental inflation pressure. Southern markets were under greater stress while northern markets performed better; deep rural remained slow.
• Countermeasures deployed: Six new Pulsar variants were launched in Q4 targeting sporty and commuter sub-segments within the 125-200cc class, with prices recalibrated for OBD IIB changes. Sequential share improvement was visible between March and April.
• Freedom CNG gaining traction: 60,000 units retailed, reaching 10-11% penetration of the 125cc segment in CNG-dense areas like Kerala and Delhi. Adoption is constrained by pump density anxiety and inconsistent filling pressure at some stations, which compromises the promised 200 km range.
• More product firepower coming: New Pulsar portfolio launches will continue through FY26, and an entry-level 125cc product is under consideration, with a branding decision to be revealed closer to launch.
• Growth ambition: The priority is to outpace industry growth in the 125cc+ segment, with management expecting the industry to grow 5-6% in FY26.

Electric Vehicles: Chetak Leadership & Profit Inflection

• Chetak becomes number one: Market share rose from 13% in Q4 FY24 to 25% in Q4 FY25, making Chetak the top-selling electric two-wheeler brand in India, driven by the 35 series platform launched in December.
• Profitability within reach: Over a 12-15 month horizon, Chetak has moved from no contribution breakeven in sight to being “very close to line of sight on being EBITDA breakeven,” conditional on pricing holding steady at current levels. The overall electric profit pool has swung from a few hundred crores of loss to a marginal profit, aided by improved scooter economics and the scaling electric 3-wheeler business.
• Cost savings runway: The next flush of cost reductions is expected only towards the later part of FY26, since the new 35 series platform was launched only in December and the savings cycle resets from there.
• Commercial EV strength: E-auto market share doubled from 17% to 33%, securing the number one position in April and May. A new brand, GoGo, has been created for the electric auto portfolio, distinct from the ICE RE and Maxima brands.
• E-rickshaw entry: A launch is planned by early July under a new brand, but FY26 is explicitly a year of observation and pace-building, not solid scale-up. The ambition targets the entire 40,000-unit monthly e-rickshaw segment, but management is cautious on timing.

Thapar: “I’d say we are now very close to line of sight on being EBITDA breakeven, yes. But that is subject to a big if, which is the fact that pricing needs to hold steady at these levels.”

Margin Outlook: Headwinds Converging

• FY25 resilience explained: Margins held despite the EV portfolio moving from under 10% to nearly 20% of domestic revenue, with Chetak remaining significantly margin-dilutive but with much better economics. Currency tailwinds and operating leverage offset the drop from profitable KTM exports and higher discretionary spends.
• Currency turning adverse: The USD INR, which had been a tailwind, is now softening. Lower dollar realizations will weigh on margins in the near term, with Q1 already seeing the impact.
• Commodity inflation building: Aluminium prices have surged, with firmness in steel, ABS, and rubber, partially offset by declines in precious metals. Net commodity inflation is expected for the quarter.
• OBD IIb cost layer: The rollout of OBD IIb norms from the start of Q1 adds a further material cost impact. Combined with commodity inflation, the total material cost headwind could approach 1 percentage point.
• Pricing response partial: Management is taking a selective approach, raising prices in parts of the portfolio while dropping them in parts of the motorcycle business to revive competitive momentum. Pricing is expected to cover only 30-50% of the overall material cost impact.

BACL & Capital Allocation

• BACL turns profitable: Bajaj Auto Credit Limited (BACL) turned PAT-positive in Q3 and delivered its first full year of profit, with disbursals crossing INR10,000 crores. Total capital deployed stands at approximately INR2,400 crores, with accumulated losses now recouped.
• Capital needs ahead: As BACL operates with a full national footprint for the full year, expected additional capitalization is INR1,200-1,400 crores to support book growth.
• Arm’s length governance: BACL is run with an independent board and its own risk and lending policies, explicitly not as a “handmaiden of Bajaj Auto.” Bajaj has never operated on a subvention basis with BACL, so there has been no pullback in financing penetration.
• Shareholder return: The board approved a dividend of INR210 per share, totaling just under INR5,900 crores.

Sharma: “We are running BACL at an arms length. It has got an independent board... and we don’t want to run it as a handmaiden of Bajaj Auto. So, it has to be run on the sound principles of a financing company.”

Guidance & Commitments

Key Metrics