Record Q1FY27 (INR17,244cr rev +37%, EBITDA 20.9%) absorbed worst single-quarter commodity shock in 2+ years.

Demand side — premium segments remain strong but no traction in below 125cc despite GST cut support. Customer preference changing or stress in that segment? Also shift happening from ICE to EVs and from which segment?

The GST cut, as you remember, effective on 22nd September last year, unleashed a very, very high level of growth, which continued beyond the festive in quarter 3, in quarter 4. Like I said, quarter 4, Vahan registrations in motorcycles, the growth was about 23% odd. So that's a very, very high level of growth. Consequently, what has happened is that there has been inflation through pricing. And then, of course, there was the West Asia crisis, which brought the difficulties of LPG availability into every kitchen of India and affected consumer sentiment. And to some extent, I would say that the impact on different segments was different. And this actually reflects the structure of the Indian economy and what the Indian economy is perhaps going through in the sense that the upper half of the society are economically much, much stronger and the people down the pyramid have weakened. And this is getting reflected in the way the segments are growing. Therefore, even when we see the motorcycle growth dropping from 23% or 24% to 8 - 9%, the 150cc, the 250cc segments, they are growing at 20% plus. But the 100cc segment and also the 125cc now are actually growing at low single-digit numbers. So that is the nature of the growth. It's all coming together, as you know, a 14% growth for two-wheelers and I would say, a 7 - 8% growth in quarter 1 for motorcycles. This all obviously includes EV. EV two-wheelers, of course, has had an outstanding growth of almost 70%. And it's not difficult to explain this because as always, a large part of the EV market is driven by operating economics. And I remember 2020-21 when the progression was slow, there was a point of inflection when the petrol prices had crossed INR100 a litre, and suddenly we saw demand for EV going up. Now because of the West Asia crisis and the impact on petrol, and generally on people feeling that the fuel bill might just go out of their control, there has been a surge in adoption of electric vehicles. And that's why even in this environment, when motorcycle is growing at 8% and kind of a number, the EV growth is 67%. Now it's cannibalizing - the most obvious answer to that is its cannibalizing ICE scooters based also on the anecdotal surveys, which we do about other vehicles which people were considering buying. So, the nature of the EV functionality, which is rather not as strong in delivery of range as motorcycles, but very similar to scooters on a full fuel tank. The cannibalization is obviously impacting ICE scooters more than anything else, any other category.

Capacity expansion plan for both two-wheeler and three-wheeler EVs? Where are we on profitability now?

So, we are right now at 50,000 units. We are limited at that for EV two-wheelers. And immediately through some productivity measures, both at our end and with the vendors, we hope to unlock it at 60,000. But you can well imagine that we are very enthused by the very promising outlook of this industry. And the fact that we were out of scooters from 2007 onwards, as you know. And so, we came into scooters, forget the powertrain, whether ICE or electric, but we came into scooters only in 2020 via electric Chetak and have captured 23 - 24% market share, sometimes number 1, right now at number 2, but very, very close to leadership. So, both from an industry growth as well as our competitive position point of view, we are very optimistic, and we are going to unlock more capacity in this. Similarly, in three-wheelers, not just in electric, but in ICE models also, we are experiencing constraints. Our electric vehicle 7012 has been a runaway success. I would say it's probably the top-selling model in the industry right now. And that's a wide-body vehicle. And we are at the same time finding a good surge internationally in three-wheelers. So, we are unlocking that capacity. Why I'm not giving you a number as yet, which is business unit related, is because there is a lot of fungibility in capacity. And therefore, I said from the current sort of 7 million, we'll go to 9 million plus in the medium term. That work has already started. But of course, to address your specific question on Chetak, it will be about 60,000 units in the immediate term. And then progressively, in high-end bikes, in three-wheelers, electric as well as wide-body, and obviously, Chetak, we will increase capacity.

Upcoming launches — new 150cc under Pulsar, refreshes in 125cc and 2 new brands in 125cc within fiscal '27. Understanding correct? How to think about domestic growth for fiscal '27 and industry growth?

Yes. So obviously, we are very positive about our outlook, not just because it's good to be optimistic and you can't say any other thing, but because of the acceptance of our recent launches, which I said, we upgraded our product. These are also not new products. So first, I want to frame the lens through which you should look at our domestic motorcycle business. The first point I want to make is that, as you know, and we've been saying this, that while we are present in the 100cc segment, we are participating in it at our own terms. Of course, we have to be competitive, but we have got an eye on the implications on the bottom line. So, we want to participate on it on own terms. And when between growth and profitability, the baseline profitability starts getting into a conflict situation in that segment, we tend to favor profitability and are prepared to lose market share. This is a segment which has been over the years, underperforming. It has gone from 55% share of motorcycles to 45%. And so, it is one of the key reasons why we feel that we must focus on so much more business opportunity, which is there in the top half because in the bottom half, this segment is under pressure. And finally, our core competence is really innovation and R&D. And this segment offers less degrees of freedom to attack it on the basis of our core competencies. Therefore, the frame of reference is the 125cc plus segment. And from 125cc to 400cc, where I must say that we are participating with 4 brands actually, which is Pulsar, which goes from 125 to 400; Dominar, which is 250 to 400; KTM, which is 250 to 400; and Triumph. This strategy is now going to be retaken to its fulsome play beginning 1st August, so not very distant. And between now and September, we will launch, like I said, almost 10 new variants, you got it right, I just wanted to give you a historical context, but you got it absolutely right. There will be 2 brand-new Pulsar and new styles, new features, class-leading features, a lot of electronics, attractive color and graphics. And I would say that the Indian customer is going to be very pleased by the powertrain performance, because obviously, we've been doing all the tests. The launches are imminent. So yes, 10 plus 2 upgrades and 2 new models immediately in the next 6 weeks or so. With this and based on the empirical evidence of the last couple of quarters, we are very confident it should shake up the industry and really raise the competitive bar right in time for the season. And through this, I would say that there is more stuff coming towards the end of the fiscal, but we would be in very, very good shape. And hopefully, the season will be very good in the 125cc plus segment.

All the upcoming product launch introductions would happen by September?

I think you guys are not taking me seriously yet. In the next 6 weeks, yes, a lot of the upgrades will happen. They will start to roll out. Like I said, there are 10 models which are being rolled out. It's a very, very hectic time. As soon as this call gets over, I have to go and do some work on the new launches. And then a couple of new brands, hopefully within the fiscal. But we'll see the timing. We have to look at the environment also to time it.

Cash at INR21,000 crores, more than INR2,000 crores FCF per quarter. Will end up at INR27,000 crores by year end. Continue through buyback route or increase payout ratio via dividend?

So, let me clarify that, Rakesh. Cash on balance sheet was INR21,000 crores at the end of June. July is typically the month when we pay out the dividend. And last week, we've just concluded the buyback. Cumulatively, both those corporate actions put together would mean that INR10,000 crores in July would have been paid out to shareholders, right, which essentially will mean that cash will dip from the under INR21,000 crores that existed at the end of June. But that said, given the strong cash conversion that we have on profit to cash, I expect it to really build back to INR15,000 crores thereabouts by the end of the financial year, at levels that you've been used to seeing at the end of each financial year. If I have to just ascribe an element of seasonality, July is typically the month when there's a significant outflow to shareholders. And this time, because we've already committed, if you recall, in our last meeting, we've already committed to paying out 100% as our payout ratio of the profit that we made last year, which was INR9,825 crores. So, to your point, one, 100% payout ratio done. Two, cash will deplete at the end of July and build back towards the end of the financial year because cash will keep generated across the remaining quarters. And the third is, this year, we opted for the hybrid route of doing a base dividend plus the balance as a buyback only because with the changed regulations under the Finance Act, the taxation for buyback was quite attractive for non-promoter shareholders. And therefore, we opted to go down that route as well. So base dividend plus buyback already explored.

KTM-Bajaj opportunity: Is India being made global manufacturing hub for larger KTM portfolio? How much of KTM's R&D is leveraged across Bajaj and Triumph? Any joint development programs for future ICE and EV portfolios?

So first of all, I must say that KTM is being run as an independent company. And of course, liquidity was facilitated. We helped establish the senior leadership team. And there are a governance and oversight, which goes on. But the KTM brand and the KTM operations, they are remarkably different in their franchise from the Bajaj brand. So, they are going to be run separately. KTM will be run by their management, and there are huge opportunities for it to grow in its segment, which is really racing and adventure and stuff like that. Even before this episode, there was a very healthy collaboration between Bajaj R&D and the KTM R&D, which resulted in the smaller cc, smaller engine street and motocross and adventure bikes, which were manufactured entirely in India and then exported around the world under the KTM brand. Even at that time, there was a constant endeavour to expand this collaboration, which is co-designing with our R&D and manufacturing over here. And that exercise continues. Obviously, it got interrupted for almost a couple of years because of the issues, which KTM went through. We have now again picked up the project with even more strength and conviction. And I wouldn't go as far as to say that it will become the global manufacturing hub. But yes, there will be a substantial amount of manufacturing here. And because it's an independent company, we have encouraged KTM to apply the same competitive benchmarks if we want to be a competitive supplier to KTM, and we don't want to compromise KTM's competitiveness and its growth in any way. And therefore, it is going to be done on the basis of sound business logic.

How many touchpoints is Triumph present at and any target for this fiscal year?

We are, I think, in 120 exclusive stores and about 90 new stores where we have combined KTM and Triumph, so that the stores can be viable in small areas. So, I would say that almost 210 - 215 stores are where Triumph is available. And certainly, this is an exercise which is ongoing. And as the brand is getting recognized, as more products are getting added, there was recently the flat tracker, which got added. There are a couple of new products for Triumph also on the anvil, which will again expand its franchise. We will continue to expand the store basis the viability.

For e-two-wheelers, is it only capacity or is managing the global supply chain much more difficult vs ICE? Timeframe to become number 1?

See, it is obviously not just capacity. Capacity is just table stakes. I mean if you can't manufacture, then you can't sell. But even if you have the capacity, it doesn't mean that you'll be able to sell more than everyone else out there. So, we would say that it's still the fundamental things like product innovation, brand and the customer experience, which we can deliver. And as you have said, that here, global supply chain, including software, hardware, batteries, etcetera, is an important thing. So now we've been in the game for about 7 - 8 years actually. So, a lot of experience. And I think because of this experience coming into play and because of over these 8 years relationships get formed. Because of that, we've been able to, you know, on a product where we were losing money hand when we had not been in scooters, like I said, but still in a few years' time, we have moved up into a very, very good position. And we have also, on the other hand, taken a slightly more difficult path by going through exclusive stores because we know that our range will be expanded. It is getting expanded. And it will not find good expression if we share our motorcycle stores with Chetak. But of course, it puts pressure on doing the distribution network, because again, those issues are store viability, and all come. But now those issues about store viability and all are falling by the wayside because the industry is growing leaps and bounds. But I remember, just 2 years back, we used to be sitting and breaking our heads as to which all cities we can enter or which we can't enter because of store viability. Now that constraint is almost disappearing, which will allow us to now really step on it and expand the network, which is at about, I think, 530 - 550 stores to 1,000 stores. I can see 1,000 stores coming in a couple of years. And now that's something solid we are talking about.

Profitability of e-two-wheelers and three-wheelers — left unanswered earlier.

Well, this was a question from Kapil. Kapil, sorry, we missed answering it back then. But our profitability, our EBITDA margin for the electric portfolio business comprising two and three-wheelers continues to remain double digit as we had queued in the last quarter. So double-digit overall margin. And if I have to double-click on that, Chetak has now moved from what a few quarters back was EBITDA neutral to now becoming EBITDA positive. So, we now have the contribution of an EBITDA positive on Chetak in addition to the growing scale of the electric three-wheeler that is leading to an overall portfolio margin of double digit.