🏍️ Bajaj Auto Ltd. Q2 FY26 Analysis: Steering Towards a New Era of Peak Performance

As an investor, you seek clarity on core performance and future strategy. Bajaj Auto's Q2 FY26 results deliver on several fronts, powered by strong execution, favorable market conditions, and strategic expansion. The key takeaway is an all-time high performance built on a robust and diversified business model, despite short-term supply chain headwinds in the EV segment.

🚀 TL;DR: Quick Snapshot for the Busy Investor

• ✅ Record-Breaking Financials: All-time high Revenue, EBITDA, and PAT, with standalone EBITDA margin reaching a strong 20.5%.

• ⚠️ KTM Loss Integration: Consolidated PAT was impacted by the incorporation of a ₹634.5 crore share of six-month loss from the associate, Pierer Bajaj AG (PBAG), due to an earlier restructuring and different reporting cycles.

• 📊 Exports & CV Turbocharged: Export volumes grew 24% YoY , driven by a robust 67% YoY growth in export Commercial Vehicles (CV) . Domestic CV volumes also saw a decent rise of 3.1% YoY.

• 🧭 Premiumization Wave: Domestic motorcycle sales, especially the 125cc+ segment (Pulsar N-series, NS-series), saw strong upgrades, benefiting from festive cheer and the GST rate cut.

• 📌 Chetak Regains Leaderhip & New Launches: Despite supply chain constraints impacting EV volumes in Q2, Chetak regained the number one position in Vahan Registration in October. The new e-rickshaw 'Riki' has been launched, strengthening the three-wheeler portfolio.

📈 Quick Table: Financial & Operating Performance (Consolidated)

Note: Q2 FY25 PAT (Reported) includes a one-time exceptional deferred tax provision of ₹211.3 crore [873, 701]. H1 FY26 PAT is also lower QoQ due to a one-time charge for the share of loss from associate Pierer Bajaj AG (PBAG) of ₹634.5 crore.

🌐 Segment and Geographic Highlights

Segmental Performance (Consolidated, Q2 FY26)

Geographic & Product Performance (Standalone Volume)

The Exports business was the standout, breaching the 200,000 unit mark in October after nearly 40 months]. Export revenue set a new dollar and rupee record [196].

• Exports CV Volumes: Soared by 67.2% YoY in Q2 FY26, driven by broad-based growth across markets like Philippines, Myanmar, Afghanistan, Ghana, and Mexico. Mexico tariff concession (5% vs 35% for others) is a competitive advantage [364, 365]. * Domestic Motorcycles: Volumes declined -6.3% YoY in Q2 FY26 [876], but the latter part of the quarter and October saw strong retail performance driven by the Pulsar portfolio achieving an all-time peak [93, 94]. Management expects the industry to improve its growth rate by 6-8 percentage points in the medium term [100].

• Premium Segment (KTM & Triumph): Delivered an all-time high with over 30,000 units sold, growing 30% QoQ [137]. Absorbing the higher GST rate on $>350$cc models to maintain prices proved beneficial for festive sales [142].

• EV Portfolio (Chetak & 3W): The combined EV portfolio delivered a double-digit EBITDA percentage in Q2 FY26 [135, 340]. The issue with Rare Earth Magnets (HRE) led to an almost 50% shortfall from the Chetak plan [123], but the company quickly shifted to more secure LRE-based components and regained the number 1 position in October [125, 126, 868]. The new e-rickshaw 'Riki' has been launched to capture a share of this large profit and revenue pool [117, 915].

🗣️ Management Commentary: Resilience and Milestones

"I am delighted to say that the Q2 performance has built on the strong note on which we commenced Q1 FY '26 and it has recorded several all-time highs."

— Mr. Rakesh Sharma, Executive Director, Bajaj Auto Limited [61]

"So quite clearly, it was a quarter of milestones on multiple fronts... this bears testimony yet again to the resilience and adaptability of our business model..."

— Mr. Dinesh Thapar, Chief Financial Officer, Bajaj Auto Limited [165, 179]

💰 Valuation Snapshot

The calculated Trailing Twelve Months (TTM) EPS is ₹312.7, which, against a snapshot price of ₹9075, gives a TTM P/E of 29.0times.

🔮 Outlook: Next 2–4 Quarters & Triggers to Watch

The company maintains an optimistic outlook driven by a focus on market share gains and strategic initiatives:

• Export Momentum: Sustained growth of 15%-20% is expected, driven by diversification and a richer mix.

• Domestic Motorcycles: Aim to outpace the industry growth in the strategically important 125cc plus segment. New Pulsar variants are planned for introduction in December, March, and May.

• EV Recovery: Regaining momentum in both the two-wheeler (Chetak) and three-wheeler (E-Auto) EV segments by removing supply chain constraints. E-Rickshaw scale-up is planned in a few months.

• KTM/Triumph Restructuring: Final regulatory approval for the acquisition of control in KTM's parent company, Pierer Bajaj AG (PBAG), has been received. Full line-level consolidation is expected in the next quarter. Management is already working with partners to reshape the portfolio to benefit from the lower GST rates on certain displacement categories.

• BACL Growth: The financing subsidiary (BACL) is expected to become self-funding after a potential final capital infusion of ₹200-₹300 crore.

🛑 Risks & Monitoring

1. Global Macroeconomic Risks: Sustained export momentum relies heavily on a stable macro environment in emerging markets (Africa, LATAM). Any currency volatility (e.g., strengthening rupee) or geo-political disruption could impact realization and volume.

2. EV Supply Chain & Competition: While the rare earth magnet issue is resolved, any future supply chain disruption for critical EV components (like battery cells) could derail the aggressive EV momentum . Increased competition in the high-growth EV auto segment is also a key factor to monitor .

3. KTM/Pierer Turnaround Execution: Post-acquisition, the successful integration and operational turnaround of Pierer Mobility AG will be critical for consolidated profitability. Failure to execute the new product portfolio strategy (to take advantage of GST cuts) could lead to margin pressure.

4. Regulatory Changes: The upcoming discussions around mandatory ABS on all two-wheelers could increase costs by ₹2,000-₹3,000 per unit and pose a temporary challenge to industry capacity/demand.

🔒 Disclosure

This content is for educational and informational purposes only and is not intended as investment advice. The analysis is based on publicly available data as of the result date. Past performance is not indicative of future results. The author or their team may or may not hold positions in the securities mentioned. All financial data is based on the consolidated unaudited financial results for the quarter ended 30 September 2025, unless explicitly noted as standalone. Data is believed to be reliable but is not guaranteed for accuracy.