Bajaj Auto Export Momentum and EV Profitability Support Earnings Growth

Investment View and Earnings Outlook

Anand Rathi Research retained its BUY view on Bajaj Auto in its July 26, 2026 result update, following a strong Q1 FY27 operating performance, sustained export momentum and improving electric-vehicle profitability. The broker’s positive stance is supported by solid domestic and export two-wheeler demand, GST relief, market expansion, an aggressive EV strategy, favourable product mix, economies of scale, foreign-exchange benefits and improving profitability across EV platforms.

Anand Rathi expects Bajaj Auto’s volumes, revenue, EBITDA and core PAT to grow at CAGRs of 11 per cent, 16 per cent, 17 per cent and 18 per cent, respectively, over FY26-FY28E. The broker considers the company relatively resilient to input-cost inflation because foreign-exchange gains offset much of the pressure. Success of new launches and domestic market-share progression remain key monitorables.

Q1 FY27 Financial Performance

Bajaj Auto’s standalone Q1 FY27 revenue rose 37 per cent year on year to Rs 17,244 crore, broadly in line with Anand Rathi’s estimate of Rs 17,368 crore. Volumes increased 29 per cent to 14.4 lakh units, while realisation improved 6 per cent to Rs 119,894 per unit.

EBITDA grew 45 per cent year on year to Rs 3,595 crore, exceeding the broker’s estimate of Rs 3,527 crore, mainly because other expenses were lower than expected. EBITDA margin was 20.9 per cent, 54 basis points above Anand Rathi’s estimate and 79 basis points above consensus. Adjusted PAT increased 42 per cent to Rs 2,983 crore, broadly in line with Anand Rathi’s estimate of Rs 2,890 crore and 8 per cent above consensus.

Cash reserves increased to Rs 21,000 crore in June 2026 from Rs 18,000 crore in March 2026. The finance segment reported Q1 FY27 revenue of Rs 1,112 crore and EBIT of Rs 303 crore.

Export Momentum and Regional Performance

Management said Bajaj Auto outperformed the underlying industry by two times in its top 30 export markets, with broad-based regional growth except in the Middle East and North Africa and Asia. The company is targeting exports above 2.5 lakh units per month from Q2 FY27 onwards.

• Africa: Industry volume grew about 50 per cent, while Bajaj Auto grew at twice the industry rate, aided by the upgraded Boxer 125 Heavy Duty. Nigeria-led institutional sales took market share to 60 per cent.
• Mexico: The country became a top-five global market, supported by premium products and favourable tariffs.
• Brazil: Volumes were growing above 50 per cent, with 75 stores in operation.
• Asia: The region remained weak because of Bangladesh and Nepal.

Product Pipeline, EV Strategy and Capacity Expansion

The product pipeline includes a new 150cc Pulsar, Pulsar facelifts in the 160-400cc range, a new Pulsar and upgrades in the 125cc segment within six weeks, as well as two new 125cc motorcycle brands during FY27. Bajaj Auto had 90 joint KTM and Triumph stores in operation.

Chetak’s latest 2501 version contributed 12 per cent to its five-model portfolio. Chetak had 530 exclusive stores, 4,500 customer touch points and presence across 850 cities.

EV two-wheeler and three-wheeler revenue accounted for 30 per cent of domestic revenue and generated a double-digit EBITDA margin in Q1 FY27, while Chetak EBITDA margin turned positive. E-auto volumes doubled and represented 45 per cent of the L5 category.

Bajaj Auto is expanding overall capacity from 70 lakh to 90 lakh units annually, including EV, high-end motorcycle and three-wheeler capacity. It is also increasing e-two-wheeler capacity from 50,000 to 60,000 units per month.

Margins, Estimates and Valuation

Sequential commodity costs rose by 4.5 per cent of revenue. However, management said price increases, rupee depreciation, product mix, higher volumes and lower discretionary spending offset the impact.

Anand Rathi raised its FY27E and FY28E EPS estimates by 16.5 per cent and 12.6 per cent, respectively, driven by higher export volume, realisation and margins.

The broker’s revised sum-of-the-parts target price of Rs 12,800, raised from Rs 10,750, is based on the following valuation components:

Key Risks and Monitorables

• Weaker-than-expected demand in key regions.
• Intense competition.
• Unsuccessful new products and launches.
• Volatile commodity prices.
• Adverse currency movements.

Success of new launches and domestic market-share progression are key monitorables for Bajaj Auto.