On KTM - what is your vision on operating this business? Will production continue as before? Are there guarantees for manpower? On capital, how soon will KTM service the debt provided, and is more capital needed for working capital or capex?
We have to be mindful that regulatory approvals are still being sought and we cannot get actively involved at the moment. Our intent is to take charge once approvals come through, initiating a revamp of the entire governance framework, leveraging Bajaj system experience to restore competitive growth, drive financial viability, and find synergies in procurement and production. We also plan to expand the joint development program from under 400cc all the way up to 990cc. We need to wait for three regulatory approvals - takeover commission, investment authority, and merger control - which will play out over 2 to 3 months. Until then we don't want to jump the gun, but the broad directional intent is to run the business absolutely differently from the past.
Will the entry-level 125cc product be Pulsar branded or a separate brand? Is there space for another brand in the 125cc to 150cc category alongside Freedom and Pulsar?
That question is still open and will be decided as the product acquires its full form and specs. The 125cc segment is now nearly equal to the executive 100cc segment at about 28% of the Indian motorcycle industry, with two or three sub-segments emerging. Freedom is positioned for long-distance riders keen to save money. Whether there is space for another brand beside Pulsar will depend on how distinct these sub-segments are - we will reveal closer to launch.
You expect 5% to 6% industry volume growth in FY '26. What is our own volume growth outlook? Given negative 7% to 8% volume declines in second half FY '25, what milestones do we need to achieve to get closer to industry volume growth or exceed it?
Our priority is to outpace industry growth in 125cc+ which remains our core focus. We slipped on this in a few months for reasons explained and have taken countermeasures. The industry will not be linear - high growth regions and periods will alternate. Over a quarter or every 4 to 5 months when we take stock, we should be ahead of 125cc+ industry growth rates.
On KTM - given normalization of international operations, inventory reduction and production commencement in CY '25, would you expect things to turn around in CY '26 with positive EBITDA?
We have not started working on it - still going through the regulatory process. Once approvals are in place, a full turnaround plan will be put into action which will be past the middle of this year. CY '25 will be a year of bringing back continuity and reviving engagement, partnership with customers, and ensuring normalcy. We should start to see the first set of results reflect possibly in calendar year '26.
On the domestic market - what has caused the slowdown? How many new products are you launching and how do you see market share evolving in the domestic market?
Slowdown is largely in smaller urban centers; deep rural is slow but smaller and mid-tier towns are doing well, while metros are okay. Southern markets are under greater pressure while northern markets like UP, Delhi, Haryana are doing better. Our 1 to 2 percentage points erosion is largely in 125cc+ - based on competitive launch timing. We have responded with feature-rich Pulsar products and more launches are planned through FY '26 including an entry-level 125cc product. We are in solid second position with 1.3x more than the third and fourth player but behind number 1, and our aim is to come as close as possible to number 1 in FY '26.
On 3-wheelers - how should we think about growth potential over the next few quarters? Should we look at the e-Rickshaw ramp-up similar to how E-auto volumes ramped up, or differently?
I am very optimistic about the 3-wheeler business given the enormous last mile mobility need. Including e-Rick, the total opportunity is 40,000 vehicles per month. The top 10% of e-Rick is lithium-ion - we will introduce lithium-ion given lead acid issues. Drawing parallel to Africa entry years ago with a high premium product, education shifts customers over time. FY '26 will be a year of observation and pace-building, not solid scale up. We will see quarter-on-quarter, with eyes set on the entire 40,000 unit market.
Follow-up on 3-wheelers - what is supporting the export rebound? Given the comment on double-digit revenue growth despite single-digit volume in Q4, can revenue growth be double digits for fiscal '26 with exports plus EVs combined?
The 3-wheeler exports rebound is largely from Asia and parts of Africa like Ethiopia coming back, plus markets like Mexico. With growing electric component, top line gets buffeted beyond volume growth. The overall volume versus value mix for FY '26 depends on rise of Africa - currently steady, neither going up nor down but tentative.
On margins - good gross margin improvement this quarter. Can you talk more about contribution margins and platform profitability of Chetak? How should we think directionally about E2-wheeler business profitability?
Significant progress over 12 to 15 months - we now have line of sight on EBITDA breakeven for Chetak with the 35 series, subject to pricing holding steady at current levels. With PLI accounting consistently, we are nearly breakeven from what was previously a significant bleed. Looking at total electric profit pool including 3-wheelers, we have moved from few hundred crores of loss a year ago to a marginal profit situation, on back of improved Chetak unit economics and scaling of electric 3-wheelers.
How do you see EV profitability improvement going forward? How significant can it be from current levels?
The journey on cost rationalization continues unabated, with work underway on next levels of savings. PLI will be quite consistent through this year. Pricing is anyone's guess but assuming it holds constant, improvement will come from cost savings. With the new platform launched only in December, the next flush of cost savings will come towards the later part of this current financial year.
On exports - you mentioned 15% to 20% growth visibility. What time frame is this - 6 months or full year? Also given inventory levels in export markets?
Inventory levels are pretty much in good shape, maybe a few markets here and there. Every quarter we expect to be between 15% to 20% up over the same quarter previous year.
On rare earth metal issue - most auto companies seem stocked till mid or end July. What is your thinking on the latest process updates and Indian-Chinese government negotiations given China controls 90% of supplies?
There is no particular negotiation - the process for declaration and certification has been defined as of 4th April. It involves self-declaration by importing vendor company, certification by Indian ministry agencies and Chinese embassy in India, then 2-level approval in China by provincial government and Ministry of Commerce. About 30 applications have been certified by all Indian agencies and forwarded to China - we have to wait and see outcome. Building alternatives is medium-term option as it requires development, investment, testing, validation and integration.
Bookkeeping - export revenues and spares revenues for the quarter please?
Exports revenue is 470 million dollars. Spares revenue is INR1,566 crores.
On exports - 26% industry growth despite macro challenges, adverse currency, fall in crude. What is supporting your 15% to 20% growth expectation?
The 26% growth on top 30 countries is on a base hurt first by COVID and then by extreme currency volatility. As things stabilize, countries seek certainty - period of currency steadiness has allowed customers to digest new prices. Penetration of 2-wheelers is very low outside ASEAN, India and China - that is a fundamental driver. We took early steps in Latin America strengthening brand, channel and partners - we are number one in Mexico, all 5 Central America countries, Colombia, Argentina, Peru in sports. Plus revival in markets like Sri Lanka where we have 80% to 85% benefit, and KTM exports return in Q2 - all combine to support 15% to 20% quarterly growth.
On CNG penetration in 125cc - is it just pump density impacting CNG sales or something else like power performance of the CNG bike?
Product acceptance is fantastic with 60,000 bikes retailed and high satisfaction in surveys. Two issues in scaling Freedom: first, anxiety about pump density - in spread out areas customers worry about being stranded, while in tight areas like Kerala and Delhi we get 6% to 10% to 11% penetration. Second issue is filling pressure - the 2 kg tank should deliver 200 kilometers but some pumps under-fill compromising range, an issue for long-distance riders. We are now selectively targeting long-distance riders in geographies with right pump density.
On BACL and rural financing - NBFCs are becoming averse to weak CIBIL customers. How is BACL helping and what is the share of BACL in total financing rural and urban?
BACL runs at arms length with independent board and sound financing principles - risk and lending policies are not influenced by Bajaj Auto. BACL helps by providing seamless virtual and physical presence at our counters making customer access friction-free. Both BFL and BACL never worked on subvention basis, so we have not pulled back between Q2-Q4 - no change. Penetration of BACL in motorcycles is about 40% and about 50% in 3-wheelers.
On the financing business - how much money already invested? Is there a broad number for fiscal '26? Can you share the book value or net worth?
Total capitalization since inception is INR2,400 crores, of which INR2,100 crores went in the last financial year. For FY '26 we expect anywhere between INR1,200 crores to INR1,400 crores more capitalization needs as the book grows with full national footprint for full year. Book ended with AUM of about INR9,500 crores. On net worth, INR2,400 crores capital with losses recouped as the year turned a profit of about INR60 crores.