Ladies and gentlemen, good evening and welcome to Q1 FY 2027 Results Conference Call of Bajaj Auto Limited. My name is Nirav and I will be your coordinator. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the initial remarks of the management. Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Newar, Head, Investor Relations from Bajaj Auto Limited. Thank you and over to you, Mr. Newar.
Thank you, Nirav. Good evening, everyone, and thank you for joining us for the call today. Welcome to Bajaj Auto's Q1 FY 2027 earnings call. On today's call we have with us Mr. Rakesh Sharma, Joint Managing Director, and Mr. Dinesh Thapar, Chief Financial Officer. We will begin our call with the opening remarks from Rakesh on the business and operational performance for the quarter, followed by Dinesh, who will take us through the financial highlights. We will then open the forum for Q&A. Thank you. Over to you, sir.
Thank you, Anand. Good evening, ladies and gentlemen, and welcome. Thank you all for joining in. Quarter one is built further on the record-breaking financial year 2026 by delivering a highest quarterly performance across all parameters. Volumes at 1.4 million, revenue of INR 17,000 crores, EBITDA of INR 3,500 crores and PAT of INR 3,000 crores. Along with EBITDA margins of 20.9%, I think all of these results beat most of your estimates. It was a tough quarter with raw material inflation, supply chain and logistics disruptions, as well as a ransomware attack, which you may have read about, but it was defended comprehensively and successfully. Though exercising abundant caution, we suspended operations for a few days to complete thorough checks and investigations. All of these above issues combined impaired availabilities by about 10%-15%, more so in exports, high-end bikes and EVs.
For these disruptions, these business areas would have recorded an even better performance and I would say that we were looking at crossing 1.5 million units this quarter, which got sort of hampered because of these issues. While all the BUs delivered handsome growth, I would like to call out the superb performance of exports and EVs. Taken together, our electric two-wheeler and three-wheeler businesses delivered their largest ever quarter and are now at 30% of domestic revenues with double-digit EBITDA percentage. Electric mobility is a meaningful contributor to the company growth and profitability, opening up new segments both in domestic and overseas markets. Let's get to the business units now. Exports business unit. The business unit established a new high of 732,000 units in the quarter and $735,000 revenue in the quarter. The BU accounts for 40% of Bajaj Auto by revenue.
Of the top 30 markets, which account for almost 80% of the industry, we continue to significantly outpace the industry growth by over two times, thereby increasing our market shares very strongly in these important markets. Notably, exports growth was not just faster than the industry, but was broad-based across all the regions, except MENA, the Middle East and North Africa for obvious reasons, and was achieving superior price positions than compared to Q4. African markets did very well, growing by almost 50%, and we grew by twice that rate. We doubled our retails in Africa, led by the new introduction last year of the upgrade of the Boxer 125, which is now called Boxer 125 Heavy Duty. Nigeria led the growth, being in a pre-election phase, which increases institution sales.
By our estimates, a disproportionate share of this expansion was captured by us, doubling retails year-over-year and delivering a market share of almost 60% in retail terms. The solid franchise of the Boxer brand and a wide footprint of retail and service network powered the performance. Latin American markets also grew, albeit at a slower pace than before, and here, too, the performance was way above the industry, particularly in Mexico, which is the largest market in LATAM. The combination of the success of our high-end models, the NS series, the N215s, et cetera, a well-organized supply chain in Mexico, which gets the best tariffs at 3%, and a wide distribution network continued to strengthen the competitive position in this key market, which is now amongst the top 5 markets of the world.
Retails in Brazil clocked 50% plus growth with a very healthy financial performance in the subsidiary. Our store count stands at 75 top-class stores, and it continues to be expanded. The entire Latin American region is a very strong driver of not just our export performance in terms of volume and revenue, but also of corporate EBITDA now. The Asia industry was muted due to underperformance in the countries of Bangladesh and Nepal. A series of launches were made in Philippines, along with establishment of exclusive motorcycle stores to serve the high-end motorcycle customer as part of our strategic thrust to build the personal motorcycling category over there through these new products and new stores. KTM motorcycle exports from India have revived after the disruption of past several quarters.
In Q1, KTM exports from India grew by 20% +, while the Triumph brand exports grew by 40% year-over-year. Three-wheeler exports delivered a record of 100,000 units, growing by almost 70%, commanding a dominant market share of over 65% of three-wheeler exports from India. Our growth was secular across regions in mature as well as nascent markets. Overall, the exports business, which like I said, is 40% of our revenue, has established an outstanding growth momentum. We are looking at moving exports to beyond the 250,000 per month level this quarter and onwards. As you will recall, we were just a few quarters earlier trying to knock at 200,000. Domestic two-wheelers. To capture some synergies, we have brought our two-wheeler business in the umbrella of the two-wheeler business unit.
The two-wheeler industry turned in a resilient performance as registrations grew by 14% year-on-year in Q1. Though much lower than the 25% growth of Q4, but under the circumstances, a very healthy performance. This growth was driven by EV scooters and the 150 to 400 cc segment of motorcycles. The 100 cc and 125 cc segments were flattish, resulting in a motorcycle growth in the industry of 7%. The two-wheeler industry is really being driven by EV scooters and the 150-plus segment. This view now accounts for 25%. Bajaj Motorcycles account for 25% of our revenue. Here we continue to witness faster-than-industry growth in the 150 cc-plus segment on the back of new variants. I want to just break down the domestic motorcycles business into the turnaround program which we have launched. This is an exercise we had commenced post-festive in November, in Q3 last year.
It was a program to address end-of-cycle fatigue being faced by parts of the portfolio. The reinvigoration of the 150 cc+ segment was prioritized first. This has resulted in sales outperforming the industry by one and a half times in this segment, despite some elements of the old portfolio still being a drag. The performance has been secular across all states. All states, I think barring one, have shown growth with the new models of the N and NS series, which are now contributing almost 60% of our sales in the 150 cc+ segment, signaling a healthy acceptance of the refreshed portfolio. Consequently, we have seen, on the basis of Vahan, expansion in market share of a couple of percentage points in the last five months.
Going forward, we will complete this exercise for the 150 cc segment by the introduction of an absolutely new 150 cc under the Pulsar brand and 10 facelifts in the 160 to 400 cc range with class-leading features and superior engine performance. The next focus is the 125 cc segment, where again, an absolutely new 125 cc will be introduced in the Pulsar brand, along with a couple of new upgrades. Our aim is to accomplish this exhaustive portfolio makeover within the next six weeks. By the time we meet next in October, we should be able to give you some early reports of their acceptance. Further, in the year, we aim to introduce two new brands in the 125 cc segment to cover the full spectrum of customers in this large segment, as well as proposition customers from the 100 cc segment to upgrade.
In Pro Biking, comprising the KTM and Triumph brands, the business continued its accelerated growth trajectory during the quarter. Together, KTM and Triumph delivered another record performance with combined domestic volumes of nearly 40,000 motorcycles, growing more than 50% year-on-year. KTM performance was strong across both the Adventure and Duke portfolios, with the Adventure range delivering another record quarter. Triumph maintained healthy momentum with the recently launched Tracker 400, with styling inspired from flat-track racing. Together with KTM Adventure and Triumph Scrambler, we now lead the adventure category in India. Customer engagement was vigorous in both brands through initiatives like the KTM Moto Carnivals, Duke's Track Experience, The World of Triumph, and the Distinguished Gentleman's Ride, all of which were very well received. The rollout of the joint KTM Triumph stores to expand reach while ensuring store viability is progressing steadily, with now almost 90 outlets operational. Chetak.
Electric scooter volumes continued to scale rapidly with 65% year-on-year growth, driving EV penetration to almost 25% of ICE scooters at an all-India level. In some states, actually going beyond 50% already. Within this environment, Chetak outperformed the industry, growing nearly 80% year-on-year and delivering its highest-ever quarter in terms of volumes, revenues, and profitability. The newly launched agile and light Chetak 2501, aimed at the younger buyer, continued to do well and now constitutes almost 12% of the 5-model portfolio under the Chetak brand. Demand, however, continued to remain ahead of our ability to supply. Capacity expansion has been undertaken with an immediate and medium-term focus to enable us to better serve the growing market. The reach of Chetak today stands at over 530 exclusive stores, supported by a wide network of 4,500 customer touchpoints across more than 850 cities.
As capacity improves, we expect to support not only domestic growth but also accelerate our international expansion. The domestic two-wheelers, together with KTM, Triumph, Chetak, Pulsar, Dominar, and Platina brands, account for about 40% of our revenues. Collectively, and driven by the outstanding performance of the 150cc motorcycles, KTM motorcycles, Triumph motorcycles, and Chetak, I can safely say we were the fastest-growing two-wheeler in quarter one. In commercial vehicles, the three-wheeler industry, including e-rickshaws, grew by 11% year-on-year, driven by a doubling of sales of e-autos, which now constitute 44% of the L5 segment. Q1 saw our highest-ever billings and retail performance. The ICE franchise remained rock solid with a market share of about 70%, and leadership position in EVs was maintained. In the L3 or the e-rickshaw segment, our newly introduced Riki is progressing steadily with presence now in nearly 150 cities.
Our focus is to upgrade customers through superior quality, reliability, and ownership experience, as we see the category as a good expansion opportunity with a very specific use case. With a 12-model portfolio in electric three-wheelers, we possess the widest portfolio from the smallest to the largest vehicles with the longest range, covering the full spectrum of use cases in passenger as well as cargo. Interestingly, demand has been robust on the ICE side too, particularly in exports, where three-wheeler development in multiple markets is driving growth. Capacity issues restricted sales of some models, both in India and overseas. The spares business maintained its run rate of INR 1,700 + crores in Q1 too, whilst delivering record margins. In closing, Q1 was a volatile quarter but was successfully navigated.
The supply chain disruptions should be easing off in Q2, it should help grow the top line, and the weakness of the Indian rupee will hopefully be helpful in mitigating cost increases. Inflation and international logistics will need to be managed closely. Having said that, the demand environment, both in domestic and international, particularly in our key markets, is very positive, though the business environment may still be a bit volatile. However, putting it all together, the outlook is promising. Capacities have emerged as a key constraint to growth. With an eye on the future, we are undertaking an expansion of capacity by almost 25%, from the current 7 million units per annum across different businesses to progressively go up to 9 million units per annum. The key areas to address will be EVs, both two-wheelers and three-wheelers, high-end motorcycles, and three-wheelers.
In conclusion, through Q2 and rest of FY 2027, our focus will remain on the seven key areas. Domestic motorcycles, achieving a superior competitive position and growth in the 125cc+ segment by leveraging the imminent total portfolio makeover. Exports should pass the 250,000 per month level on the back of leadership in sports segment of LATAM and a more aggressive share gain in commercial bikes in Africa, again, on the basis of the growing success of the Boxer 125 heavy duty. Super premium sports segment, accelerate growth in both Triumph and KTM, business network expansion, and investment in niche segment development like Adventure and sport. In electric business, capture share of the rapid industry growth in both two-wheelers and three-wheelers. Certainly, capacity management and maximization of availability will be attracting a lot of management attention.
In KTM AG, continue to support the management in the turnaround underway, bringing KTM AG back to its normative levels. Finally, BACL, we will continue to build capability in BACL and continue to deliver a class-leading performance out there. With that, let me hand the session over to Dinesh.
Thank you, Rakesh. Good evening, everyone, and thank you for joining us on this call. You've just heard from Rakesh that the company delivered its best-ever quarterly performance on revenue and profit, underpinned by record volumes. This growth has been broad-based with all our businesses, domestic motorcycles, domestic three-wheelers, electric two-wheelers, and exports, all contributing meaningfully to deliver this performance. When you look at it, every cut of the business, whether it's ICE or EV, two-wheelers or three-wheelers, and domestic or exports, all delivering double-digit growth. Before I get into the financial performance, let me spend a few minutes on what has truly been a very significant factor of this quarter, the very volatile operating environment.
On commodity inflation, as many of you would recall, when we last met in May, I had indicated that the operating environment had turned sharply inflationary, and we were estimating commodity inflation to be in the range of 3.5%-4%. We had also then spoken about having taken pricing actions to offset about 40% of that impact while continuing to watch the situation closely and act dynamically as the quarter progressed. Through the quarter, commodity inflation intensified even further. Inflation across the metals complex accelerated meaningfully through May, taking the overall inflationary impact for the quarter to about 4.5% of revenue. It was clearly a hyperinflationary commodity environment, with virtually the entire basket witnessing sharp increases. Steel rose by upwards of 10%, aluminum and platinum by nearly 40%, rhodium as well by 40%, while ABS, copper, nickel, and natural rubber also moved up quite substantially through the quarter.
In fact, as the quarter progressed, we also started to witness inflation building up across proprietary components, electronics, energy, logistics, and labor costs, resulting in higher overall conversion costs as well. Now, as many of you would appreciate, those of you who've been in this industry for a long time, we've rarely witnessed commodity inflation of this order of magnitude compressed into such a short period of time. To put this in perspective, the commodity inflation we absorbed in this single quarter was greater than the totality of the inflation that we've experienced over the previous two financial years put together. That, I believe, gives you a sense of the sheer intensity and enormity of the issue that we were faced with on the cost environment.
That said, we also responded decisively, as I'd indicated in the previous call, we responded with calibrated pricing, very judiciously taken through April and June, enabling us to offset nearly about half of the inflation through pricing. The balance on margin was absorbed through a host of factors, notably dollar realization and discretionary cost rationalization that I'll talk about as we get into the financials. The second defining feature of the quarter was the series of supply chain and network disruptions that emerged across multiple fronts, making the operating environment considerably more complex than what we've typically experienced. While none of these challenges in isolation would have materially impacted the business, their simultaneous occurrence required a very high degree of operational agility and execution across the organization. To start with, fuel availability became a significant challenge early on in the quarter, following the curtailment of industrial LPG supplies.
This necessitated a rapid reconfiguration of our energy consumption pattern across both our own operations as well as the wider vendor ecosystem. Accelerated efforts were taken to optimize fuel consumption and increase dependence on alternate energy sources, namely CNG and electric, all while ensuring that production schedules by and large remain unaffected. At the same time, geopolitical developments in West Asia led to force majeure declarations by certain global suppliers and disrupted maritime logistics, resulting in tightness across key raw materials, particularly aluminum alloys and polymers. Our procurement teams responded swiftly by onboarding multiple alternate sources, both domestic as well as global, and thereby ensuring continuity of supplies despite a very fluid sourcing environment. We also experienced localized manpower availability challenges during parts of the quarter, driven by higher cost of living arising from spiraling LPG costs and workforce migration due to elections.
The seasonal effect of this factor aside, the level of labor shortage was exceptionally pronounced this year and particularly stifled production in the months of April and May. Across each of these situations, our teams acted with remarkable speed and coordination to minimize the impact on the business. While these disruptions did constrain our ability to fully service demand and resulted in some loss of production opportunities of about 10% of volume during the quarter, the business still delivered record volumes and financial performance. It is therefore fair to say that had it not been for these external supply shocks and constraints, both our volumes and financial outcomes, as reported externally, would have been even stronger. On the currency front, the story continued to remain distinctly favorable. The rupee depreciation provided an important and welcome cushion to manage the very sharp and significant impact of an exceptionally inflationary quarter.
As I mentioned, over the last few quarters, this has been a structural advantage for the business here. Given the strength and diversity of our portfolio, with exports now accounting for nearly 40%-45% of the business. The rupee depreciated through Q1 with our realized USD INR rate coming in at 94.4 versus 90.6 in the previous quarter and 85.6 in the same quarter last year. Turning now to the financial performance. Building on the momentum that we have seen over the last few quarters, the business delivered yet another record quarter with volumes, revenues and profits hitting new highs. On revenue, volumes reached an all-time high of over 1.4 million units, a growth of 29% year-on-year, while revenue from operations crossed the INR 17,000 crore mark for the very first time, coming in at INR 17,244 crore, representing a robust 37% year-on-year growth.
What I find noteworthy about this performance is that you will have noticed virtually every operating lever of the business has contributed to this topline. Volume remained the single largest driver, with the business delivering strong sales growth across both domestic and export markets. Pricing, as I discussed earlier, was implemented in a calibrated manner through April and June to recover a significant portion of the unprecedented commodity inflation. Currency continued to provide an important cushion against the elevated cost environment, and mix remained structurally favorable. The continued strength of commercial vehicles, premium motorcycles, exports, and the steadily increasing contribution of electric vehicles all enhanced the buildup of our revenues. In addition, spares revenue was at a steady range of between INR 1,700 crore-INR 1,800 crore, providing a recurring support to overall revenues and profitability.
On EBITDA, the quarter came in at INR 3,596 crore, again an all-time high with a strong 45% year-on-year growth. EBITDA margins inched up to 20.9%, an improvement of 10 basis points sequentially, despite the hyperinflationary commodity environment that I'd spoken about. If the revenue story was all about all four levers of growth coming together, volume, pricing, currency, and mix, the profitability story was even more compelling. While revenues grew 37%, EBITDA grew by 45%, and the ability of the business to convert strong topline growth into higher earnings despite operating in an extremely volatile and challenging environment, I believe is the hallmark of this quarter's performance. As I'd mentioned quite categorically during our last interaction in May, that in an environment such as this one had to be extremely disciplined on cost, particularly discretionary spending.
I'm pleased to say that as an organization, we responded exactly in that manner. Over and above the revenue drivers, higher volumes translated into meaningful operating leverage, and the EV business continued to improve its profitability, driven by scale and value engineering. The organization remains intensely focused on sourcing efficiencies and prudent control over discretionary expenditure. To sum it up, the sequential margin expansion was primarily supported by higher realizations and a richer mix that you will see reflected on the gross margin line, which reduced the extent of the severe commodity inflation, which was then made up by operating leverage arising from higher volumes and disciplined cost management across the organization that you will see reflected on the other expenses line. Together, these factors more than offset the challenges on input cost inflation, even after the pricing actions were taken through the quarter.
On a year-on-year basis, margins improved by 110 basis points, primarily driven by favorable currency movements and improved operating leverage, which more than offset the adverse cost versus price dynamics. All of this flowed through to the bottom line as well, with profit after tax coming in a tad under INR 3,000 crores. Again, a new high for the company and up 42% year-on-year. Quickly, a word on cash. The company continued to generate strong free cash flows during the quarter, reflecting the underlying quality of earnings and robust cash conversion. We generated over INR 2,300 crores of free cash flow during this quarter, almost double that of the same period last year, translating into a cash conversion of almost 80% of profit after tax.
The balance sheet continues to remain very healthy, with surplus cash in excess of INR 21,000 crores at the end of the June quarter, well managed and providing sufficient fuel for future growth investments, strategic opportunities and improved shareholder returns. Before I move to the consolidated numbers, let me make one point up front for your attention. The year-on-year comparison this quarter on our consolidated results is not entirely comparable nor like for like, as it includes the consolidation of a full quarter of Bajaj Mobility AG's results through our Netherlands subsidiary, BAHBV, which was not part of the base quarter. You will recall that we had started to consolidate Bajaj Mobility's results in the last quarter, but the last quarter did not have a full quarter's numbers. This is the first time that the consolidated numbers has a full quarter of Bajaj Mobility's numbers in the current one.
Having said that, for those of you who've been following the underlying businesses over the last few quarters, I think the direction of travel is becoming increasingly evident. The contribution from our subsidiaries is increasingly and steadily becoming more meaningful, as each of these businesses continues to gain scale and significance. On a consolidated basis, standalone revenues of INR 17,200 crores translated into consolidated revenues of INR 21,689 crores, reflecting a 65% year-on-year growth, while consolidated profit after tax came in at INR 3,226 crores for the quarter, up 46% year-on-year. This quarter, the stronger consolidated growth was driven by the solid performance of Bajaj Auto Credit Limited, which I will talk about in a bit, the steady expansion of our Brazilian subsidiary, and the consolidation of a full quarter's results of Bajaj Mobility AG. Let me now spend a quick minute on KTM and BACL.
On KTM, as you are aware, this is the first full quarter of line-by-line consolidation, and therefore, certain aspects of comparability will naturally normalize over the coming quarters, and we will speak more on it as we progress with each one. On the operational front, the turnaround continues to progress in line with the roadmap we had outlined internally. Compared to the same period last year, when production had virtually come to a standstill during the restructuring process, manufacturing has now progressively ramped up through the year and is approaching underlying retail demand. Billing performance has improved in line with this recovery. At the same time, the planned normalization of dealer and plant inventories has largely been completed, with inventory levels now stabilizing at the desired levels across the broader system.
We are also seeing the benefits of tighter cost control on fixed costs and other overheads. These improvements are now becoming evident in the financial performance. These indicators remain an important focus area as we continue to execute the turnaround in a calibrated manner. I know that many of you are already in touch with the management team of KTM and would therefore have access to the public disclosures and updates, including the recent ones made by BMAG, where many of these details can be tracked. That said, from our side, Anand and the investor relations team will of course be happy to provide any further details and clarity that you may need. On BACL, it continues to scale at a very healthy pace and delivered yet another quarter of very strong performance.
Total income crossed INR 1,100 crore, while profit after tax for the quarter came in at INR 227 crore, more than doubling the same time over last year. To give you a sense of the scale of business, assets under management have now hit the INR 20,000 crore mark, representing a growth of over 70% year-over-year. The capital adequacy ratio remains healthy at 19%, while the business continues to deliver an industry-leading return on equity of over 25% as of June 2026. Similarly, BACL's financial results press release and other regulatory disclosures are available in the public domain by virtue of its CP and NCD listings. For those of you who would like to explore the performance in greater detail, that is now out there. Let me close with a brief outlook. As we look ahead, the operating environment continues to remain extremely volatile, complex and uncertain.
One important change that we have observed as the first quarter progressed, is that inflation is no longer confined to the base metals complex. The cost pressures have become more broader with proprietary components, electronics, electrical parts, labor, logistics and energy, and conversion now moving up simultaneously and meaningfully. While the business experienced only a part of this broader cost inflation during the first quarter, the second quarter is likely to reflect its impact over the full period. At this stage, however, it would be premature to put a precise number around the inflationary impact, given the many moving parts. The environment continues to evolve almost on a weekly basis and remains heavily influenced by global developments and geopolitical events. Consequently, any estimate that we provide today could look very different in a few weeks from now. As always, we will continue to respond dynamically.
Pricing remains one lever, but not the only one. We will continue to focus on value engineering, sourcing initiatives, productivity, and disciplined cost management while closely monitoring the currency environment, which has provided an important cushion over the past several quarters. How much of that support continues will naturally depend on how the rupee evolves over the coming months in the context of the initiatives and measures announced by RBI. Our approach, however, remains unchanged. We will continue to protect the competitiveness of the business, remain very disciplined on costs, invest behind strategic priorities, and respond with agility as the external environment evolves. With that, let me hand the call back to Anand and open up the floor for questions. Thank you.
Thank you, Dinesh. Nirav, with this, we can open the floor for Q&A.
Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. A request to all the participants, kindly limit yourself to two questions per participant, and rejoin the queue for a follow-up question. First question is from the line of Kapil Singh from Nomura. Please go ahead.
Yeah, good evening. Congratulations, sir. My first question is on the demand side. You mentioned that demand in the premium segments remains strong, we haven't seen that kind of traction in the below 125cc segments. This is despite support coming in from the GST cut. Is it the customer preference or that is changing very rapidly, or is it that the customer in that segment itself is facing some kind of stress? Also related to this, is there a shift also happening from ICE to EVs? If so, from which segment?
Yeah. Thanks. The GST cut, as you remember, affected on 22nd September last year, unleashed very high level of growth, which continued beyond the festive in quarter three, in quarter four. Like I said, quarter four, Vahan registrations in motorcycles, the growth was about 23% odd. That's a very high level of growth. Consequently, what has happened is that there has been inflation through pricing, 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. 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 stronger and the people down the pyramid have weakened.
This is getting reflected in the way the segments are growing. 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. The 100cc segment and also the 125cc now are actually growing at low single-digit numbers. That is the nature of the growth. It's all coming together as a 14% growth for two-wheelers, and I would say a 7%-8% growth in quarter one for motorcycles. This all obviously includes EV. EV, of course, has had an outstanding growth, EV two-wheelers of almost 70%. It's not difficult to explain this because, as always, a large part of the EV market is driven by operating economics. I remember 2020, 2021, when the progression was slow.
There was a point of inflection when the petrol prices had crossed INR 100 a liter, suddenly we saw demand for EV going up. Because of the West Asia crisis and 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. That's why even in this environment, when motorcycles are growing at 8% and kind of a number, the EV growth is 67%. The most obvious answer to that is it's cannibalizing ICE scooter based also on anecdotal surveys which we do about other vehicles which people were considering to buy. The nature of the EV functionality, which is 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 any other category.
Thank you for the comprehensive answer, sir. Just a quick one on the EVs. What is the capacity expansion plan for both two-wheeler and three-wheeler EVs, and where are we on profitability now?
We are right now at 50,000 units. We are limited at that for EV two-wheelers. 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. 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 one. Right now at number two, but very close to leadership. 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 is probably the top-selling model in the industry right now, and that is a wide-body vehicle. We are at the same time finding good surge internationally in three-wheelers. We are unlocking that capacity. Why I am not giving you a number as yet, which is business unit related, is because there is a lot of fungibility and capacity. Therefore, I said from the current sort of 7 million, we will go to 9 million + 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.
Then progressively in high-end bikes, in three-wheelers, electric as well as wide body, and obviously Chetak, we will increase capacity.
Thank you very much. I request all the participants, kindly limit yourself to two questions per participant and rejoin for a follow-up. Next question is from the line of Rakesh Kumar from BNP Paribas. Please go ahead. Sorry. Next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Yeah. Hi, thanks for taking my questions. two questions. Firstly, I just wanted to zoom into the launches that you spoke about. If I got it right, I think you mentioned the new 150cc under Pulsar, a couple of more refreshes in 125cc, and two new brand in 125cc within FY 2027. I want to clarify that understanding is correct. Just continuing with that, given this sort of product action that we have in the second half of the year, how should we think about the growth for the domestic business? Particularly, we did go through a little bit of fatigue last year and the growth wasn't as great last year. How do we think about the growth in FY 2027, industry as well as yourself? A bit more color around this.
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. 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. We want to participate on it on own terms.
When 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%. 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. I'm not saying that it'll implode any day, not like that. These changes happen over a period of time. Over the last five years, something which was 55% has become 46% over the last five, seven years. It is soft in its size and growth. Of course, as you know, it offers very little joy for profitability.
Finally, our core competence is really innovation and R&D. 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. From 125 to 400cc. Where I must say that we are participating with four brands actually, which is Pulsar, which goes from 125 to 400. Dominar, which is 250 to 400. KTM, which is 250 to 400. Triumph, which is 400. Even though KTM and Triumph are different to Bajaj, we can't strictly call them Bajaj brands. It is a very conscious choice that we have made, that if we have to mount a serious challenge to entrenched players with good brands, it's not just about the product, but it is also about the brand.
As you all know, we will not go down the path of buying market share. We want to do it at a competitive price, but not at a loss. Have the right brand with which to challenge entrenched competitors. When you look at Bajaj, you should look at these four brands. You should look at it 125cc to 400cc segment, 500cc segment. Here, if I rewind, in fact, the precise point to which I would like to rewind is when the ABS regulations came in for the 150cc segment. We rightly called out that this will imply a huge growth in 125cc. Therefore, we scrambled to extend the Pulsar brand, which till then was a 150cc, 180cc brand, into the 125cc. It gave us very good gains.
Because we immediately leapt to a very high level of market share, which sustained itself till about FY 2025, which is when a softness started to come. Because we were at the end of our product life cycle. By FY 2026, we were reading the signs that fatigue had stepped in, into our portfolio of Pulsar. We, therefore, after that said that we will prioritize our core, our heartland, which was the genesis of Pulsar, which is a 150 to the 250 range. We set about reinvigorating the portfolio, like I mentioned. This was the launch of some class-leading features in the N series, upgrades in the NS series. The NS series, which is the most premium end of 125 as well as the 200, 250 is growing, outpacing the industry, but chipping away at market share at the top of this pyramid.
The N series is knocking share of competition, even entrenched competition, where our competitive ratio is, in some of the states, 2 is to 1. When I look at the statewide performance of the N series and NS series, I don't see any red color there. It is all green, which means we are growing in the least 1.5 times that of the industry. We are acquiring market share ever since we have refurbished the range, which is quarter 3, which is November on, and that has continued into quarter 4. This has given us a lot of encouragement and validated our strategy. This strategy is now going to be taken to its fulsome play beginning 1st August. Not very distant. Between now and September, we will launch, like I said, almost 10 new variants out of which these You got it right.
I just wanted to give you a historical context, but you got it absolutely right. There will be two brand new Pulsars and new style, new features, class-leading features, lot of electronics, attractive color and graphics. I would say that the Indian customer is going to be very pleased by the powertrain performance, which these show. Because obviously, we've been doing all the tests. The launches are imminent. Yes, 10 plus two upgrades and two new models immediately in the next six weeks or so. With this, 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.
Through this, I would say that there's more stuff coming towards the end of the fiscal, but we would be in very good shape, and hopefully, the season will be very good in the 125cc+ segment.
These are all on Pulsar platform, what you mentioned. You also mentioned two new models by the end of the fiscal. Those are new nameplates. Is it new nameplates or is it just the refresh of the portfolio that we're doing? Just want to be clear on the brand expansion. Are we going from four to five? Is that something also on the horizon?
At this point of time, we are looking at a different brand because the propositions will be different from Pulsar. I can't reveal the propositions more at this stage. Because the propositions will be different, we don't want to call them Pulsars. They will have a very specific angle to them, and there will be two different brands. We hope to not just capture a bigger share of the 125cc plus segment, but with this action, we hope to upgrade the 100cc customer. As you know, participating in the 125cc allows us more degrees of freedom in terms of product innovation. Hopefully, this customer will get attracted by it and travel up from 100cc to 125cc. That is also part of the strategic intent, which will get realized hopefully this year.
Thank you. Participants, kindly limit yourself to two questions per participant, and we join for a follow-up. Next question is from the line of Raghun andan NL from Nuvama Research. Please go ahead.
Thank you, sir, for the opportunity. Congratulations on extremely strong numbers. Sir, just a clarification on the new product, the upcoming product launches. You said all the introductions would happen by September. Would that be right?
I think you guys are not taking me seriously yet. In the next six weeks, yeah, a lot of the upgrades will happen. They'll start to roll out. Like I said, there are 10 models which are being rolled out. It's a very hectic time. As soon as this call gets over, I have to go and do some work on the new launches. A couple of new brands, hopefully within the fixed fiscal. We'll see the timing. We have to look at the environment also to time it well. You're right. I deliberately took some time over the last question, the answer was really not just specific to the person who asked it, but I just thought that everyone would probably get an idea of the strategic thinking which is there in Bajaj, in the domestic motorcycles business.
Very helpful, sir. Thank you so much. To Dinesh, sir. Sir, on the other expenses, it is lower as a % of sales, both QoQ and YOY. You indicated cost savings, operating leverage. Just wanted to understand, would you see this as a sustainable rate going forward? Given that there are so many launches, how do you see the trajectory ahead?
Raghu. Yes, sir. I think for the first quarter and possibly given the inflation outlook for the second quarter, we are going to be very hard to look at discretionary costs. Obviously, there are times in business when you have some leeway to be able to make investments and you're a bit looser with what you want to then spend on. Specifically on fixed costs is where we will be quite discerning about what we will spend in quarter two as well. Make no doubt about the fact that as the new models roll out, if we need to be spending monies to drive competitiveness in market and marketing activation and marketing spend, that's not the area that we're going to be cutting with.
It's more to do with the discretionary and establishment fixed costs, that you can expect that we will keep very tight even as we get into quarter two.
Noted, sir. Thank you so much.
Thank you. Next question is from the line of Rakesh Kumar from BNP Paribas. Please go ahead.
Hi. Good evening, thank you for taking my question. My first question was around market share. If I'm looking at the wholesale motorcycle market share, it has been coming down. Despite what you spoke about, that the entry segment motorcycle has been losing share and the premium is doing better. Is this a new direction in which we are focusing more on the premium segment and the overall market share could keep coming down and that is a strategic direction? Through the two model launches and more refreshes, you would expect that to start turning around the market share overall in terms of motorcycles as well?
First of all, I would not spend too much time on the wholesale-based market share. Yes, it is there, but that's also driven by the stock management policy. I think everyone has now got access to Vahan, online access, and it is absolutely current. We are really looking at Vahan registrations as a way to understand our competitiveness. Yes. What has happened is that, like I mentioned, that in the 100cc segment, we are losing share, and that is what is dragging the overall market share down. We are prepared for that. I'm not saying that we are vacating that segment. All I'm saying is that we will participate in it at our own terms, in terms of the profitability.
When the environment becomes difficult and the customer is under pressure, economic pressure, then we may lose market share because we've got products which are higher priced, even though they offer some benefit. When the environment eases up, the same customer may prefer our product. We will participate in it in our own terms. Depending on the environment, we will see how that 100cc segment behaves. Our focus is to, irrespective of the market going up or down, to continuously outpace the industry in the 125 + segment. In that, I feel that the turnaround is very much underway in the 150cc plus, because we have started to gain market share in that segment.
Now with the imminent launches and the action shifting into 125cc from next month onwards, hopefully we will experience the same phenomena in 125cc segment led by the new introduction, as we have experienced in the 150cc +, where we put in new products. I must also point out one thing. These are not on-off situations. When you take a brand as large as us with a franchise which is so historical with so much of depth, it is very difficult to switch on and switch off.
ranges. This whole makeover of the range, the passing away of the old and establishment of the new cannot be abrupt. It has to be achieved over a period of time because there are geographic pockets where people will want to buy only the old vehicles because they'll say, "This is what my dad drove and this is what I want to keep." We have to be conscious of that, and therefore it has to be done over a period of time. You cannot switch on and switch off. Yet, the old parts of the 150cc+ are still dragging down the performance. Despite that, the new parts of the 150cc + segment, which is the N and NS, have overcome the drag of the old part and still delivered a good market share increase in quarter four and quarter one.
My second question was around cash on the books. We have about INR 21,000 crore of cash now, more than INR 2,000 crore of free cash flow generated every quarter. We will end up by about INR 27,000 crore of cash by the end of the financial year, much above INR 15,000 crore of cash that you want to keep on the books. Do you want to continue through the buyback route, which gets restricted for a year period, or you want to start going through the dividend route, you increase your payout ratio, and that gives a greater predictability on how much you are going to pay out each year?
Let me clarify that, Rakesh. Cash on balance sheet was INR 21,000 crore at the end of June. July is typically the month when we pay out the dividend. Last week we've just concluded the buyback. Cumulatively, both those corporate actions put together would mean that INR 10,000 crore in July would have been paid out to shareholders, which essentially will mean that cash will dip from the under INR 21,000 crore that existed at the end of June. That said, given the strong cash conversion that we have on profit to cash, I expect it to really build back to INR 15,000 crore, thereabouts, by the end of the financial year, at levels that you've been used to seeing at the end of each financial year.
July is typically the month, if I have to just ascribe an element of seasonality, July is typically the month when there's a significant outflow to shareholders. This time it is 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 INR 9,825 crore. 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 generating across the remaining quarters.
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, therefore we opted to go down that route as well. Base dividend plus buyback already explored.
Thank you. Rakesh, I'll request you to come back for a follow-up question. Next question is from the line of Amit Hiranandani from PhillipCapital. Please go ahead.
Congratulations to the team for a great set of numbers. Sir, basically, want to understand more about the opportunities between the KTM and Bajaj. Just combining these three questions into one for you to answer. First is, are we planning to make India as a global manufacturing hub for a larger portion of KTM's portfolio? Secondly, how much of KTM's R&D is now leveraged across Bajaj and Triumph products? Lastly, are there any joint development programs we are working on for future ICE and EV portfolios?
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, there is a governance and oversight which goes on. The KTM brand and the KTM operations are remarkably different in their franchise from the Bajaj brand. 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 the 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 endeavor to expand this collaboration, which is co-designing with our R&D and manufacturing over here. 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. I wouldn't go as far as to say that it'll become the global manufacturing hub. Yes, there'll be a substantial amount of manufacturing here. Because it's an independent company, we've encouraged KTM to apply the same competitive benchmarks if we want to be a competitive supplier to KTM. We don't want to compromise KTM's competitiveness and its growth in any way. Therefore, it is going to be done on the basis of sound business logic. As far as we know, India as a manufacturing base is highly competitive. When you take on board all the soft factors, things which have called over the years for a China Plus One and a China Plus Two strategy, then India, as a manufacturing base, at least I can say in motorcycles, is absolutely outstanding and out there in the forefront.
Why would we not exploit that for the advantage of KTM? Yes, on that basis, the initiative will continue to expand.
Yes, sir. This is helpful, sir. Lastly, secondly, just want to understand how many touchpoints Triumph is present and any target for this fiscal year.
We have, 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. I would say that almost 210, 215 stores is where Triumph is available. Certainly, this is an exercise which is ongoing. As the brand is getting recognized, as more products are getting added, there was recently the Tracker 400 which got added. There are a couple of new products for Triumph also in the anvil, which will again expand its franchise. We will continue to expand the store basis the viability. We've been down this road with the development of KTM, which we commenced in 2011 when KTM was not known to anyone and progressively built that business.
We know we've traveled down this path before, and that's how we will continue to build Triumph in India.
Understood. Thank you very much. Next question is from the line of Pramod Amthe from InCred Capital. Please go ahead.
Yeah, hi. Thanks for taking my question. I wanted to get your experience with the e-rick, which you have launched. Considering that customer profile is relatively challenged in terms of loan availability and all, how have you been able to handle it? Does it create a long-term or a medium-term funnel for your broader e-three-wheeler portfolio for them to upgrade per se?
Yes. Certainly. See, the e-rick, which is the LC category, is almost 45,000 units per month. Apart from two, three players, it is highly disorganized. The 90% of that category is lead-acid. Lead-acid is not looked on favorably by the regulators for obvious reasons. There have been now increasing instances where permits are not renewed or not given for lead-acid-based e-ricks. There is a migration which will happen from lead-acid to lithium-ion. What is happening is that there has been a lot of city laws which have been enforced, which restrict the movement of these e-ricks on highways or on flyovers because they lack the speed. Because of that, the market has shrunk a little bit.
We have obviously come out with an e-rick, which is, if you see, quite an outstanding design, outstanding performance, very robust, and I think every e-rick driver is aspiring for it. I personally met a lot of e-rick drivers in UP and Bihar. Everyone is wanting to upgrade. Yes, and you have rightly called out, there is an issue of getting the loans, there is an issue about getting loans from organized financiers like BACL, and there is an issue about the price being higher. With these pressures which are there, both from the regulatory side, the lead-acid side, and the shorter life, I guess there will be an upgrading. We have also seen some of the e-rick drivers upgrading to even e-autos, and that is one of the contributors for this doubling, this 100% growth in e-autos.
30,000 units to 40,000 units per month is a very large segment, and we will want to increase our share in it and increase business from it.
Understood. Second one is with regard to the e-two-wheelers. If I had to look at you being number two and you are a number one player, both of you are talking about capacity constraints are the challenges. Looking at the opportunity for you to get a topmost slot into there, do you think it is only just capacity or managing a global supply chain is much more difficult in case of E2 wheelers as compared to ICE? How do you want to maneuver, or what is the time frame you would put to become a number one there?
It is obviously not just capacity. Capacity is just table stakes. If you can't manufacture, then you can't sell. Even if you have the capacity, it doesn't mean that you'll be able to sell more than everyone else out there. We would say that it still does fundamental things like product innovation, brand, and the customer experience, which we can deliver. As you have said, that here global supply chain, including software, hardware, batteries, et cetera, is an important thing. Now we've been in the game for about six years, about seven, eight years, actually.
A lot of experience, and I think because of this experience coming into play and because over these eight years, relationships get formed, because of that, we've been able to On a product where we were losing money hand and fist, in a few years time, when we had not been in scooters, like I said, but still in a few years time, we have moved up into a very good position. We've also, on the other hand, taken a slightly more difficult path by going through exclusive stores. 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. Of course, it puts pressure on doing the distribution network.
Again, those issues of 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. I remember just two 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 store viability. 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, 535, 550 stores to why not 1,000 stores? I can see 1,000 stores coming in a couple of years. Now that's something solid we are talking about. Those number of stores with the brand Chetak, with a full portfolio, I think should set us up very nicely.
Sure. The last question, if I can ask, related to E2 wheelers. Other than the range, basically people talking about performance versus the family branding. Do you see much more fragmentation evolving as the penetration enters into the mid-teens or double-digit range? What are the scope probabilities you see global markets EV taking shape on two wheelers? What's the scope available?
Yeah. Because of the capacity constraint, we've not yet been able to really step on it when it comes to exports. We have commenced exports, and I think our exports are also doing pretty well when compared with competition. It's just to neighboring countries, and I can't tell you how many proposals we keep rejecting for exports because of this issue. It's not just about capacity. There is also management bandwidth, et cetera, which is needed to develop a new category in distant overseas markets. Therefore, we have stuck to the Indian subcontinent, where Chetak has been launched and doing well. It is also on its way to Philippines and a couple of other markets. Yeah, globally, we will start to expand the Chetak franchise. In India, I think you're right. As the industry goes, it's now at about 175,000 units.
I think with this pace of growth, you can see that it'll become 30%-40%. In some states, already 60% has also been reached. You'll see in a couple of years, 50% of scooters. You can see it going to 200,000, 250,000, 300,000. Obviously then some segments emerge. The primary segment, I think, two segments which will be there will be the commercial segment, because it makes a lot of sense as the range improves for the delivery boys and a lot of commercial delivery purpose. The personal segment, which is everyday commuter using it. These two segments will certainly emerge. Other than that, on the basis of other functionalities and price, I would say one will be able to cut the whole market into another two, three segments.
That is the kind of work which we are doing, and that is what is driving our product innovation. One example of that was the Chetak C2501, which is a very substantive departure from the Chetak range. In terms of the fact that it's cut its weight by almost 25 kilos or if not more. Much easier and lighter to maneuver, the turning radius, good range, nice speed, vibrant colors, et cetera, attacking more the youthful customers. You can see this innovation as an example of segmentation. Going forward, as the industry becomes large, these opportunities to segment and innovate on product will be higher, and that is very good news for us.
Thank you very much, Pramod. Ladies and gentlemen, we will take that as the last question. Now in the conference with Mr. Anand Newar, Head of Investor Relations for closing comments.
Thanks, Nirav. Before we close, there was one question that was left unanswered. I'll ask Dinesh to just state that, on what has been the profitability of E two-wheelers and three-wheelers front.
This was a question from Kapil. Kapil, sorry we missed.
Answering it back then. Our profitability, our EBITDA margin for the electric portfolio business comprising two and three-wheelers continues to remain double-digit as we had cued in the last quarter. Double-digit overall margin. 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. 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.
Thank you, Dinesh. With this, we can close the call, Nirav. V
Thank you very much. On behalf of Bajaj Auto Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you