Bajaj Auto Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Record quarter, broad-based strength: Revenue neared ₹15,000 cr (14% growth), EBITDA crossed ₹3,000 cr (20.5% margin), and PAT hit nearly ₹2,500 cr, with all business units performing well into October.
• Exports breached a psychologically important threshold: October exports crossed 200,000 units after 40 months, achieved with Nigeria contributing only 25,000 units versus 50,000-60,000 historically, signaling a durable swing in non-Nigeria markets.
• EV portfolio turned a corner on profitability: The combined EV portfolio (three-wheelers, Chetak, Yulu) delivered nearly 20% of domestic revenue and, more importantly, a double-digit EBITDA margin in Q2, driven by better unit economics and a growing electric three-wheeler mix.
• GST rate cut created a short-term margin headwind on premium bikes: Bajaj absorbed the GST increase on 350cc+ models by holding or lowering prices, a commitment that is costing margin in the near term while the company works on structural actions to address the disparity.
• What to watch next quarter: Whether Chetak regains sustained leadership after October's Vahan rebound, the pace of three-wheeler market share recovery now that supply constraints are easing, and the closing of the KTM acquisition, which will shift accounting from associate to full line-level consolidation.

KTM Acquisition: Approvals, Call Options & Next Steps

• Regulatory approvals nearly complete: Foreign Investment Control Authority (Austria) approval came end of July, merger control approvals received from all 6 relevant jurisdictions with the last from Turkey on 18th September, and Austrian Takeover Commission approval on 23rd October confirmed no mandatory takeover bid is required if the full call option is exercised.
• European Commission filing in final stage: Paperwork for third country subsidies regulation has been filed; the outcome is expected by 10th November, with deemed approval if no objection is raised within 25 days of filing.
• Call options served on the promoter: Notices for call options were served, one in June and one on 6th November, seeking to exercise the full call options to acquire the 50% stake from Stefan Pierer and Pierer Industries as directed by the Takeover Commission.
• Name change signals the transition: An EGM on 19th November will seek approval to change the name from Pierer Mobility AG to Bajaj Mobility AG; the entity will continue to be listed on the Swiss and Vienna Stock Exchanges.
• Consolidation shift imminent: This is likely to be the last quarter where KTM is accounted for as an associate; thereafter, Bajaj will move to full line-level consolidation, which will materially change the reported financials.
• Turnaround plan ready but undisclosed: Management has completed internal thinking on a full-fledged operational turnaround program straddling front-end and back-end rationalization, but declined to share details citing listing obligations of the future Bajaj Mobility AG and the pending last regulatory approval.

Rakesh Sharma: "Given the sizable GST impact on these models, it is costing us some bit as you would make out in the short term till, we take some actions to structurally address the disparity that has now been created between a 350cc and a greater than 350cc motorcycle. But it is a commitment that we are walking the talk on to build the business at the top end across KTM, Triumph, Dominar and NS400 Pulsar."

Exports: The 200,000 Milestone & Market Diversification

• Volumes grew 24% with over 550,000 units: Top 30 markets grew 14%, and Bajaj grew at 1.5x the industry, signaling market share gains across the portfolio.
• LATAM delivered its highest-ever quarterly performance: Colombia and Mexico were the standout drivers, while Brazil clocked 8,000 units with expanded production capacity and high localization.
• Mexico tariff advantage is a durable moat: Tariffs in Mexico, the largest LATAM market, have risen to 35%, but Bajaj Auto secured a concessionary tariff of only 5% because of investments made and approvals in place, a benefit shared with only one Mexican company.
• Asia and Africa delivered double-digit growth: Sri Lanka, Philippines, and East Africa were standout performers; Nigeria held steady but recovery still has runway, with its contribution to the 200,000 October milestone now only 25,000 units versus 50,000-60,000 historically.
• CV exports surged 67%: Growth is broad-based across multiple markets including Philippines, Myanmar, Afghanistan, Ghana, Mexico, and Bolivia, the result of intense development efforts over past quarters after the Egypt ban, not any single event or one-time order.
• KTM exports are recovering: KTM Austria increased sales 10% QoQ in Q2, and Bajaj exported almost 20,000 units to KTM, a recovery that augurs well for future exports of India-made products sold through the KTM network.
• Seasonality ahead: Management expects the export run rate, now knocking on the doors of 200,000 units, to see LATAM seasonality from Thanksgiving through Christmas/New Year, followed by a European slowdown in the first calendar quarter.

Rakesh Sharma: "A key point over here is that previously when we were clocking 200,000 units, it used to have a contribution of 50,000-60,000 units of sales to Nigeria. Right now, it has only 25,000 units. So, you can understand the kind of swing which has been made in performance in all non-Nigeria markets."

Domestic Premium Motorcycles: GST Disruption Turned Tailwind

• Industry rode a rollercoaster: The domestic motorcycle industry was sluggish from April to August with a 1% decline, then nosedived post-GST announcement in late August until Navratras when new rates were implemented; suppressed demand, festive cheer, and GST rate cuts then combined to deliver a historic festive 40 days that restored growth.
• Market share erosion arrested, then reversed: By the end of Q2, market share erosion had stopped; October saw the beginning of market share gains in the 125cc+ segment, driven by the 150cc+ sport segment where top-end variants performed extremely well as customers with strong wallets upgraded.
• Pulsar portfolio at an all-time peak: The festive period delivered an all-time high retail performance in both volume and revenue, with the N-series and NS-series Pulsar beating segment growth rates, supported by the campaign, new variants, early tactical support, and excellent retail finance operations.
• GST rate cut triggered an upgrade cycle: The 6%-8% swing in the industry from GST cuts, layered on natural festive growth, benefited Bajaj's premium portfolio as customers used the savings to upgrade; KTM and Triumph together sold over 30,000 units, a 30% growth and an all-time high.
• Portfolio reshaping underway for GST advantage: Bajaj is working with KTM and Triumph on reshaping the portfolio to take advantage of lower GST rates on sub-350cc products; new models will be launched in due course, and at least three new Pulsar variants are coming in December, March, and May.
• A non-Pulsar brand is in development: Management confirmed an absolutely new development for the next fiscal, describing the timing only as sooner rather than later.

Electric Vehicles: Profitability Arrives Amid Supply Constraints

• EV portfolio hit double-digit EBITDA margin: The combined portfolio of electric three-wheelers, Chetak, and Yulu delivered almost 20% of domestic revenue and a double-digit EBITDA percentage, driven by a growing proportion of electric three-wheelers and better unit economics on Chetak models, which are now nearly EBITDA-neutral versus bleeding a year ago.
• Chetak suffered a 50% supply shortfall: Industry-wide HRE-based magnet availability constraints hit Bajaj hardest given its high growth trajectory after the 35 series launch; supply was following demand until interrupted, resulting in almost a 50% shortfall to plan.
• Supply recovery executed ahead of schedule: Bajaj shifted to more secure LRE-based components and alternate geographic sources, restoring supplies by end of September and fully in October; Chetak immediately regained the number 1 position in Vahan Registration in October, though channel stock rebuilding is still in progress.
• Three-wheeler EV lost ground on capacity, not demand: Bajaj lost pole position in Q2 due to supply chain constraints on e-components and manufacturing capacity for the widebody 7012 variant, resulting in a 15% shortfall from plan; manufacturing is at peak capacity for three-wheelers due to the export surge.
• E-auto demand remains strong, E-rick shrinking: E-autos grew at 50%+ while E-ricks declined due to up-trading to E-auto and new RTO restrictions in North Indian cities; Bajaj recently launched its own e-rickshaw, selling about 500 units in eight cities, and plans to scale in a few months.
• PLI phase-out plan in motion: The PLI benefit is valid until March 2028; management intends to start building organic margin to replace it over time, with a cost rationalization work stream already underway for electric three-wheelers.
• Electric motorcycles are a must-play bet: Management acknowledged uncertainty around the outcome but argued the greater loss would be from missing the opportunity entirely, and confirmed plans to develop options serving both entry-level and high-end sporting use cases.

Rakesh Sharma: "Nobody can say for certainty that it will be a bull's eye or whatever. But I think there is a greater loss from missing out an opportunity than investing in something and that opportunity doesn't realize."

Margins, Mix & Financial Health

• EBITDA margin expanded 70 bps sequentially to 20.5%: The expansion was driven by favorable dollar realization (87.1 vs 85.6 in Q1) and better operating leverage, which together offset a net cost inflation impact of about 40 bps from steel, noble metals, copper, and rubber.
• Revenue growth was half volume, half mix and realization: Pristine volume growth contributed about half, with the balance from a richer mix (strong export portfolio, 70% growth in CV exports, step-up in KTM exports, acceleration of premium motorcycles, and steady step-up in electric three-wheelers) plus higher realization from FX and pricing.
• Other expenses rose on volume and investment: The sequential increase in other expenses was 60% linked to volume increases and 40% directed toward brand investments and R&D projects; operating leverage more than made up for both net cost inflation and these investments.
• BACL turned sustainably profitable: BACL reported PAT of over ₹132 cr for the second consecutive quarter, adding over 2 lakh customers with AUM crossing ₹14,000 cr and penetration at 40% for the Bajaj business, driven by digital capabilities and operational efficiencies.
• Free cash flow conversion near 100%: Around ₹4,500 cr of free cash was generated in H1, almost 100% conversion of PAT; surplus cash exceeded ₹14,000 cr even after a dividend of nearly ₹6,000 cr and strategic investments of slightly over ₹2,000 cr, and management expects cash to continue building toward year-end.
• Consolidated PAT grew 53% YoY: Consolidated revenue grew 19% YoY and consolidated PAT exceeded ₹2,100 cr; the difference from standalone 24% PAT growth is explained by Brazil and BACL turning profitable from a loss-making base period, plus KTM being accounted for as an associate with an equity pickup.

Dinesh Thapar: "And therefore, the point I would like to emphasize is that this bears testimony yet again to the resilience and adaptability of our business model, which is capable of delivering strong financial performance despite having to weather some storms on some fronts."

Three-Wheelers & Commercial Vehicles: Capacity Constraints Mask Demand

• All-time record quarter of 145,000 units and revenue: ICE maintained a 75% market share while EV lost ground due to supply chain constraints on e-components and manufacturing capacity for the widebody 7012 variant, resulting in a 15% shortfall from plan.
• ICE auto market is stabilizing: The ICE auto segment moved from a YTD decline to single-digit growth in October, aided by the GST cut improving payback periods; management expects the segment to become flattish going forward.
• E-auto growth is tempering but still strong: Growth has moderated from 75%+ to around 50%, partly because RE CNG payback at 13 months is better than E-auto at 19 months; Bajaj is introducing two more e-auto models to bring the total to four.
• Capacity expansion underway: Management is taking steps to build three-wheeler capacity in the next few months, particularly in the e-vehicle segment, and expects to start regaining market share in Q3 and get closer to the number one position.
• CV exports trajectory expected to continue: Growth is broad-based and not dependent on any single market or one-time order; management is also hoping for a breakthrough for the Qute business in Egypt.

Guidance & Commitments

Key Metrics