Bajaj Auto Retrains Focus On Growing Margins At The Cost Of Market Share

Bajaj Auto Ltd. is no longer interested in selling commuter motorcycles. Instead, the focus is now firmly on growing its market share in the 125+ cc class and maintaining leadership in the EV space.

That strategy is already aiding profitability, according to analysts.

“Bajaj Auto’s Q3 FY25 EBITDA was slightly ahead of estimates due to better gross margin,” Citi Research said in a Jan. 28 report. “Focus is on margins, and thus Bajaj Auto has ceded ground in the high-volume but equally competitive entry-level segment. This has manifested in optically lower market share.”

In October-December 2024, the Chakan, Pune-based automaker clocked standalone net profit in excess of Rs 2,000 crore and Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 2,500 crore for the fifth straight quarter. The Ebitda margin rose over 20% despite costs.

The performance came on the back of a 6% rise in revenue — thanks to higher exports, surging EV sales and record spares volume.

• Revenue up 5.7% at Rs 12,806.85 crore (Estimate: Rs 13,080.50 crore)

• Ebitda up 6% at Rs 2,580.73 crore (Estimate: Rs 2,641.5 crore)

• Ebitda margin up 10 bps at 20.2% (Estimate: 20.20%)

• Net profit up 3% at Rs 2,108.73 crore (Estimate: Rs 2,167.13 crore)

One basis point is one-hundredth of a percentage point.

The minor cuts in domestic two-wheeler volumes were offset by better exports — in the fiscal third quarter, the company shipped 500,000 units overseas for the first time. The company’s EV business has turned net Ebitda positive, though profitability for the Chetak brand alone is still a quarter away.

But it’s only going to get better hereon.

“The management has provided a positive outlook for the next 3-6 months, with exports growing at 20%+ and domestic growth of 6-8%,” Nuvama Research said in a Jan. 28 note.

Still, there are some lingering concerns.

An adverse product mix, partially offset by improving profitability for the EV business, lowered the average selling price by 3% sequentially to Rs 104,600 per unit, Emkay Global Financial Services Ltd. said in its note.

“The management maintains a cautiously optimistic guidance on export recovery,” the brokerage said. “Bajaj Auto would continue to leverage product actions with a view to outperform.”