- Consolidated profit jumped 25% YoY to ₹2,749.82 cr, the highest ever for a quarter.
- Revenue crossed the ₹15,000 cr barrier for the first time, driven by record volumes and a richer mix.
- EBITDA surged 22% YoY to ₹3,161 cr, lifting the margin to 20.8% – a historic high.
- Electric two‑wheelers now account for 25% of domestic revenues, outpacing last‑year levels mid‑quarter.
- Exports topped 600,000 units, with Africa and Asia delivering double‑digit growth.
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Why Bajaj Auto's Margin Expansion Beats the Sector Trend
Bajaj Auto’s EBITDA margin rose 30 basis points QoQ to 20.8%, a feat few peers have matched. The margin lift stems from three key levers:
- Currency tailwinds: A weaker rupee boosted overseas earnings when converted back to INR.
- Fuel‑efficiency (PU) benefits: Higher mileage models reduced per‑unit fuel cost, improving profitability.
- Strategic cost absorption: The company chose to shield customers from raw‑material inflation during a festive demand surge, preserving sales momentum.
In contrast, Hero MotoCorp’s margin slipped 15 bps in the same period, pressured by higher steel prices and a slower EV rollout. TVS Motor’s margin held steady but lacked the currency boost that Bajaj leveraged.
Sector Trends: The Two‑Wheeler Market’s Shift Toward Electrification
India’s two‑wheeler market is at a turning point. GST‑driven price rationalisation and rising disposable incomes have lifted overall demand, while the government’s push for electric mobility is reshaping the product mix. Bajaj’s electric portfolio, now 25% of domestic turnover, eclipsed its full‑year 2023 revenue in the middle of Q3, a signal that the EV transition is accelerating faster than analysts anticipated.
Historically, a similar inflection occurred in 2018 when BS‑VI norms forced a redesign of the entire product line. Companies that invested early captured ~15% market share gains, while laggards lost ground. The current wave mirrors that pattern, but with a higher upside because of the cost‑advantage of electric drivetrains and the impending subsidy extensions.
Export Momentum: Africa and Asia as New Growth Engines
Export volumes hit 600,000 units, the highest in 15 quarters. The surge is anchored by two dynamics:
- Africa’s demand for affordable, fuel‑efficient motorcycles: Post‑pandemic recovery and infrastructure spending have revived the continent’s two‑wheeler market, where Bajaj enjoys a 30% share.
- Asia’s premium‑segment push: In markets like Bangladesh and Nepal, Bajaj’s higher‑spec models are gaining traction, benefitting from lower tariffs under regional trade agreements.
Latin America remained a steady performer, but growth there lagged behind the double‑digit gains in Africa and Asia, highlighting a geographic re‑balancing of Bajaj’s export portfolio.
Historical Context: How Past Profit Surges Translated into Stock Performance
When Bajaj Auto reported a 20% profit jump in Q4 FY22, the share price rallied 12% over the subsequent three months, outpacing the broader NIFTY Auto index by 4 points. The rally was sustained because the earnings beat was accompanied by clear guidance on EV scaling and cost‑discipline.
Similarly, the 2017‑2018 period saw a 15% YoY profit increase after the company launched its ‘Pulsar’ line. The market rewarded the firm with a 9% share price uplift, driven by higher dealer margins and a robust dealer‑finance ecosystem.
These precedents suggest that a strong earnings beat, paired with strategic narrative (EV growth, export diversification), can catalyse multi‑month price appreciation.
Competitor Landscape: Who’s Gaining and Who’s Falling Behind?
Hero MotoCorp remains the market leader in volume but is slower on the EV front, with electric models representing only 12% of its domestic sales. TVS Motor is catching up in the premium segment but faces higher unit costs, squeezing its margins.
Mahindra & Mahindra’s two‑wheeler arm, though smaller, is leveraging its agricultural machinery distribution network to push EVs into rural markets—a niche Bajaj is also targeting.
Overall, Bajaj’s blend of high‑volume combustion bikes, a rapidly scaling EV line, and strong export pipelines puts it in a more defensible position than most peers.
Investor Playbook: Bull vs. Bear Scenarios
Bull Case:
- EV portfolio continues to capture >30% of domestic revenues by FY28, driving higher average selling prices and margin expansion.
- Export growth sustains double‑digit YoY, especially in Africa, adding ~₹2,000 cr to top‑line over the next two years.
- Currency tailwinds persist, bolstering overseas earnings when converted back to INR.
- Management’s disciplined cost‑absorption strategy maintains dealer confidence and market share during raw‑material price spikes.
Bear Case:
- Raw‑material inflation outpaces price‑pass‑through ability, eroding margins despite PU benefits.
- Regulatory delays in EV subsidies slow adoption, leaving the electric mix stagnant.
- Geopolitical tensions disrupt export routes to Africa and Asia, curbing volume growth.
- Competitive pressure from Hero’s upcoming EV platform compresses pricing power.
Given the current valuation—trading at ~12x FY27 forward EBITDA—and the strong earnings momentum, the upside potential outweighs the near‑term risks for most growth‑oriented investors.