BAJAJ-AUTO - Bajaj Auto Limited Share Price

Outlook by Management:
Bajaj Auto anticipates robust growth in FY25, driven by domestic demand and export recovery. The domestic 2-wheeler industry is projected to grow 7-8% annually, with premium segments expanding faster. Exports are expected to improve, supported by new market entries (Brazil, Europe) and recovery in Latin America/ASEAN, though challenges persist in stressed markets (Nigeria, Bangladesh).

Key Initiatives:

1. Product Launches:

   • Domestic Motorcycles: Launch of 6 new models in H1, including the "biggest Pulsar ever" (May 2024) and the world's first CNG motorcycle, targeting cost-conscious commuters.
   • EVs: Upgraded Chetak models and network expansion (200 to 600 stores by H1). Electric 3-wheelers to scale in restricted ICE markets, targeting e-rickshaw replacement.

2. Exports:

   • New Markets: Production starts in Brazil (June 2024), Qute quadricycle exports to Egypt (approved for public transport). Recovery focus in LatAm/ASEAN.

3. Premium Segments:

   • Triumph/KTM: Network expansion (150 Triumph stores in H1), global Triumph exports (19,000 units to 57 countries).

4. Margins & Financials:

   • Maintain industry-leading EBITDA margins (~20%) despite EV investments. Cost optimizations and PLI incentives to offset EV drag.
   • Strong balance sheet (INR 16,000 crore net surplus) supports growth and shareholder returns (95% payout in FY24).

Risks: Geopolitical volatility, fragile EM currencies, and EV policy shifts. Management remains confident in leveraging its multi-brand portfolio and operational agility to outperform the market.

Question from Binay Singh (Morgan Stanley):
Hi team, congratulations on good set of numbers. I have two questions, 1 on EV and 1 on Egypt. Firstly, on EV, could you talk a little bit about what is the financial headwind from electric 2-wheelers in March quarter? And how do you see that playing out in financial year '25? And when can we expect a PLI sort of incentive for Bajaj?

Answer:
PLI certifications for EV models are secured. Transitional subsidy impact was ~INR20 crore due to FAME-II to EMPS shift. Cost-saving measures and scaling mitigate EV margin drag, aiming to sustain enterprise margins while growing Chetak volumes.

Question from Binay Singh (Morgan Stanley):
Earlier I recall, Egypt used to be a key market for 3-wheelers for Bajaj"¦ Could Qute given the fact that Bajaj brand is known in that market aspire for some similar kind of a run rate?

Answer:
Egypt previously saw 6,000"“9,000 monthly 3-wheeler exports. Qute's approval for public transport opens a new segment, with initial exports of 250 units. Egypt plans to replace 3-wheelers with quadricycles, offering long-term potential.

Question from Amyn Pirani (JPMorgan):
While the government has accepted the quadricycle as the vehicle for imports. Is the currency situation in Egypt as bad as, say, in Nigeria and Argentina?

Answer:
Egypt's currency challenges are less severe than Nigeria/Argentina due to aid packages. Currency availability remains a constraint, but recent improvements support gradual Qute exports.

Question from Amyn Pirani (JPMorgan):
On the EV side"¦ can you give a broad breakup as to whether most of your customers are coming in at a certain price point?

Answer:
EV adoption is driven by commuting cost savings (INR1,500"“1,800/month). Most demand centers on INR75,000"“80,000 price bands, balancing economy and modern features.

Question from Gunjan Prithyani (Bank of America):
You mentioned that we expect the penetration to inch-up despite subsidies going down"¦ what are we thinking in terms of the portfolio expansion, capacity ramp-up?

Answer:
EV growth hinges on payback economics (fuel savings). Upcoming Chetak variants (H1 FY25) and flexible manufacturing capacity will drive volume.

Question from Gunjan Prithyani (Bank of America):
On the CNG side"¦ is there anything that you can share what does the product hold?

Answer:
CNG bike halves commuting costs, combining style, comfort, and dual fuel. Safety concerns are unfounded, given Bajaj's 88% CNG 3-wheeler share and regulatory compliance.

Question from Chandramouli Muthiah (Goldman Sachs):
With some of the geopolitical tensions"¦ how you're observing [commodity costs]?

Answer:
Aluminum/copper prices rose pre-conflict; steel/rubber were stable. Marginal pricing adjustments in Q1 FY25 offset hikes.

Question from Chandramouli Muthiah (Goldman Sachs):
Including PLI incentives, how the electric 2-wheeler business might play?

Answer:
PLI narrows but doesn't eliminate EV 2W margin gap. Cost rationalization and scale are critical. EV 3Ws with PLI match ICE profitability.

Question from Aditya Jhawar (Investec):
Is there a minimum commitment that we have given to Triumph UK"¦ what would be export as a percentage of total production?

Answer:
No export commitments. Triumph's global launch calendar and homologation drove initial exports. Domestic/international markets will scale with network expansion (150 stores by H1).

Question from Aditya Jhawar (Investec):
What are the customer profiles [for Triumph]"¦ market share in individual pockets?

Answer:
Triumph targets "modern classic" (performance + retro styling). Market share hit 20% in mature southern markets. Portfolio expansion (modern/classic bikes) will drive growth.

Question from Raghunandhan N. L. (Nuvama):
Financing business"¦ Can you indicate the focus areas, ramp-up targets?

Answer:
BACL (financing arm) covers 35% of India, targeting 100% by FY25-end. Current 2W/3W financing penetration is 75%/90%, with Bajaj Finance dominating 70%.

Question from Raghunandhan N. L. (Nuvama):
On electric 3-wheeler space"¦ how do you see the general acceptance?

Answer:
Q4 EV 3W sales: 6,500 units. 50% market share in mature markets. E-auto adoption grows via e-rickshaw replacement in restricted regions (45% of industry).

Question from Pramod Kumar (UBS):
Margin expansion drivers in FY24 and FY25 mix outlook?

Answer:
FY24's 180bps margin gain came from pricing, operating leverage, and forex. FY25 focus: mix enrichment (premium motorcycles, EVs) and cost control.

Question from Pramod Kumar (UBS):
Qute platform upgrades?

Answer:
Qute upgrades include tech enhancements, CNG/electric variants. Egypt's 500,000 legacy 3-wheelers offer replacement potential.

Question from Arvind Sharma (Citi):
How are EV revenues reflected in standalone results?

Answer:
Chetak sales are fully consolidated under Bajaj Auto. Volumes/revenue include EVs.

Question from Arvind Sharma (Citi):
Upcoming Pulsar launches?

Answer:
New Pulsar 250 launched; largest-ever Pulsar due in May. 125"“150cc models planned for H1 FY25.

Question from Amyn Pirani (JPMorgan):
Chetak's path to profitability?

Answer:
Unit-level profitability requires cost reduction outpacing price cuts. Scale and tech gains (e.g., LFP batteries) to close margin gap over 4"“6 quarters.

Question from Pramod Amthe (InCred):
BACL's capital infusion plan?

Answer:
INR2,250 crore phased infusion for BACL to finance 2W/3W across India. No export focus.

Question from Pramod Amthe (InCred):
LFP battery adoption in EVs?

Answer:
Chetak Technology Ltd. prioritizes cutting-edge tech (e.g., LFP). Innovations like ABS, CNG, and EVs underscore Bajaj's R&D focus.