Bajaj Auto export momentum, profitable EVs and Pulsar launches support earnings growth

Investment View and Valuation

ICICI Direct Research’s July 22, 2026 result update retains a BUY view on Bajaj Auto, supported by robust export prospects, strengthening domestic electric-vehicle positioning, a differentiated motorcycle launch pipeline and export-led margin resilience. The broker values the company at 25x FY28E EPS and sets a 12-month target price of Rs 12,550, compared with a CMP of Rs 10,800.

Strong Q1 FY27 Financial Performance

Bajaj Auto reported a strong Q1 FY27, with growth across revenue, volumes, EBITDA and profit after tax. EBITDA margin expansion was a positive surprise, aided by currency tailwinds.

Management described Q1 FY27 as Bajaj Auto’s best-ever quarter across key financial measures despite commodity inflation, supply-chain and logistics disruptions, labour shortages and a ransomware attack that temporarily affected production. These constraints reduced product availability by an estimated 10-15%, particularly in exports, premium motorcycles and electric vehicles. Without these disruptions, quarterly volume could have exceeded 15 lakh units.

Record Exports Support Growth and Margins

Exports reached a record 7,32,000 units in Q1 FY27, up 54% year-on-year, generating around US$735 million of revenue and contributing about 40% of revenue. Exports represented about 44% of FY26 volumes. Management expects exports to sustainably exceed 2,50,000 units a month.

• Africa: The industry grew around 50%, while Bajaj Auto grew almost twice as fast and held nearly 60% retail share in Nigeria.
• Latin America: The region outperformed industry growth, led by Mexico and Brazil.
• Three-wheelers: Export volumes reached an all-time high of 1,00,000 units, up almost 70% year-on-year, with more than 65% share of India’s three-wheeler exports.

Domestic Motorcycle Growth and Capacity Expansion

The domestic motorcycle opportunity is centred on premiumisation and market-share gains. Bajaj Auto’s refreshed Pulsar N and NS range has delivered sales growth about 1.5x industry growth.

Management planned an entirely new 150cc Pulsar, an all-new 125cc Pulsar and around 10 refreshed variants across the 160-400cc portfolio over the following six weeks. These launches will be followed by two entirely new 125cc motorcycle brands later in FY27. The company is expanding total capacity from 70 lakh to 90 lakh units annually.

Profitable Electric Vehicle Expansion

Electric two-wheelers and three-wheelers together contribute around 30% of domestic revenue and generate double-digit EBITDA margins. Chetak volumes grew nearly 80% year-on-year, with demand exceeding production capacity. Management planned an immediate capacity increase from 50,000 to 60,000 units.

Chetak was EBITDA positive and had more than 530 exclusive stores and over 4,500 customer touchpoints across 850-plus cities. In commercial vehicles, Bajaj Auto retained around 70% share in ICE three-wheelers and leadership in electric three-wheelers.

Commodity Inflation and Key Risks

Management indicated that commodity inflation was about 4.5% of revenue, with steel prices up more than 10% and aluminium, platinum and rhodium prices up nearly 40%. Bajaj Auto offset around half of the inflation through price increases, while currency benefits, operating leverage and cost control mitigated the balance. However, management expects inflation to remain high in Q2.

ICICI Direct identifies a larger-than-expected rise in raw-material costs and weaker-than-anticipated domestic two-wheeler growth during FY26-FY28E as key risks.

Earnings Estimates

Following the Q1 FY27 outcome, ICICI Direct raised its FY27E estimates for revenue, EBITDA and profit after tax. The broker also expects continued EBITDA margin expansion through FY28E.

FY27E revenue, EBITDA and profit after tax were raised by 5.0%, 14.4% and 14.1%, respectively. EBITDA margin is forecast to expand from 20.5% in FY26 to 20.9% in FY27E and 21.5% in FY28E.