Bajaj Auto — a cash fountain with two new pipes
Bajaj Auto Limited
Snapshot
Bajaj Auto makes motorcycles and three-wheelers (auto-rickshaws). It is the world’s largest maker of three-wheelers, India’s largest exporter of two- and three-wheelers (sells into ~79 countries), and it owns the premium brands KTM and Triumph (made in Pune) plus the Chetak electric scooter. Market cap ₹2,81,343 cr, share price ₹10,066, 52-week range ₹7,858–₹10,835. It trades at a P/E of 26, a price-to-book of 7.3, and earns a return on equity (profit per ₹100 of owners’ money) of 29%. In one phrase: a Great, cash-spewing franchise that has just bolted two new, messier pipes onto its money fountain — a captive lending arm and a rescued European bike maker.
As of 2026-06-20, from screener snapshot.
The verdict in one box
| Lens | Result |
|---|---|
| QGLP score | 21 / 25 (Quality 11.5/12 · Growth 4.5/6 · Longevity 4.5/5 · Price 0.5/2) |
| Buffett rubric | 7.5 / 10 PASS |
| Business bucket | Great core (asset-light, high returns) — now wrapped in a Good finance arm + an unproven European turnaround |
| Wealth-creator type | Enduring · Consistent (no profit fall >10% in 11 years) |
| Economic Profit | +₹6,640 cr (RoE 29.1% − CoE 12% on ₹38,832 cr net worth) — clearly creating value |
| Margin-of-safety price band | Strict framework ₹4,500–5,800; “quality at a fair price” vs its own history ₹7,000–8,000. CMP ₹10,066 is demanding |
A Great business and a genuine wealth creator, currently priced rich versus the quality — you’re paying a full price for a recovery and a turnaround that still have to be delivered.
In plain English
Picture a fountain. For two decades Bajaj Auto has been a fountain of cash. It makes motorbikes and auto-rickshaws using very little factory and very little of its own money — last year it spent just ₹500 cr building things and threw off more than ₹8,000 cr of spare cash. It earns about ₹28–29 on every ₹100 of capital, year after year, through good times and bad. That is the rarest kind of business: it grows without eating its own cash. Warren Buffett would call it a “Great” boat. The company is so flush it just handed shareholders 100% of last year’s profit — a ₹150 dividend plus a ₹5,633 cr buyback — to mark the Bajaj family’s 100 years in business.
Where does the moat come from? Three places. First, brand — the Pulsar is to Indian sports bikes what Xerox once was to copiers, and now KTM and Triumph sit on top of it for the rich end. Second, exports — Bajaj sells one shipping container of bikes every ten minutes, into Africa and Latin America, where it has spent years building dealer networks rivals can’t quickly copy (50% market share in Nigeria, through 800 of its own retail stores). Third, three-wheelers — it owns roughly 90% of the CNG auto-rickshaw market and is now the biggest seller of electric ones too. That moat is wide, and on the export and electric side it is still widening.
So what’s new and messy? Two things bolted on in the last two years. One is Bajaj Auto Credit — the company’s own lending arm that finances people buying its bikes. It’s growing fast (loan book doubled to ₹19,000 cr, profit jumped 12-fold to ₹665 cr) and it’s profitable, but a lending business consumes cash to grow, so on the combined accounts it makes the cash story look heavier than it really is. The other is KTM, the famous Austrian bike maker that went bankrupt in 2024. Bajaj had owned a stake for 17 years; in November 2025 it stepped in, paid off the creditors, and took full control of a business that lost over a billion euros the year before. That’s why Bajaj’s borrowings exploded from ₹1,912 cr to ₹22,713 cr — almost none of it is the Indian business borrowing; it’s KTM’s own debt now sitting on the shared books. The Indian parent is still sitting on more than ₹18,000 cr of spare cash and owes nobody.
The whole tension is in one sentence: this is a wonderful business, but at ₹10,066 — near its all-time high — you are not getting it at a wonderful price. You’re paying about 26 times earnings for a company growing the core profit at roughly mid-teens, while it loses a little market share at home and nurses a sick European patient back to health. The quality is not in doubt. The price, and the two “show-me” stories, are.
Sitting down with the management
If Buffett and Raamdeo Agrawal sat across from the Bajaj family for an afternoon, they’d come away mostly nodding — with one furrowed brow.
This is the third and fourth generation of a family that has been in business 100 years. Rajiv Bajaj, 59, has run the company since 2005, and his fingerprints are the whole story. When he took charge he did two things most managers never dare: he killed the geared scooter — the very product that built the Bajaj name — to bet everything on motorcycles, and he handed four engineers a project called Pulsar. Today that R&D team is ~1,500 strong and the Pulsar is the category. His creed is “distinctive, not different” — make the brand the name of a whole segment, not just a product. Buffett looks for that kind of passion-as-obsession, and here it’s real, not a press-release.
How have they spent the owners’ money over a decade? Mostly beautifully. Three buybacks in four years (₹2,500 cr at ₹4,600 in 2022, ₹4,000 cr at ₹10,000 in 2024, ₹5,633 cr at ₹12,000 now) — every one at a premium, all funded from a cash pile they refuse to let rot. Rising dividends on top. The Triumph alliance was capital-light genius — Bajaj builds the Speed 400 in India and put India into Triumph’s top-five markets without tying up equity. The Chetak electric bet, written off by many as too-late, is now the #2 e-scooter in the country and turning profitable. That is the one-dollar test (does each rupee retained create a rupee of value?) passed again and again.
The furrowed brow is KTM. Owning a minority of a glamorous European brand for 17 years was cheap optionality. Buying control of it out of bankruptcy — importing a business that lost €1.2bn in 2024, with a qualified auditor’s note over the messy consolidation — is a different animal. The control price was tiny (~€50m of options), and the rescue loans net out inside the group; the early signs are hopeful (KTM’s operating losses are shrinking, it briefly turned an operating profit). But this is the one decision where a patient owner has to say “show me,” not “well done.”
On integrity, the sheet is clean in a way that’s rare for a promoter-led Indian company. Promoter holding is ~55% and completely unpledged — they eat their own cooking. No SEBI action, no auditor qualification on the standalone accounts, no related-party scandal in the record. Derivatives are used only to hedge, never to speculate (their own words, and the numbers agree). Rajiv is famously, sometimes recklessly, candid in public — which is a governance virtue even when it makes headlines. The only structural quibbles are the classic Bajaj cross-holding pyramid (Bajaj Holdings sits above) and the real one: succession. Rajiv is the brand. There is no announced heir and no next-gen Bajaj visibly in an operating seat. The professional bench is deep, but this company is, today, more dependent on one man than a Buffett checklist likes.
Would they shake hands on this management? Yes — warmly. What would change their mind: KTM turning from a cheap rescue into a chronic cash drain, or a succession handled badly when it eventually comes.
What’s on the horizon (live-issues tracker)
1. The KTM turnaround — 🟡 mixed, too early to call. This is the big one. Bajaj took full control on 18 Nov 2025 and now consolidates KTM line-by-line. The numbers are still red — Bajaj’s share of KTM’s loss was ₹413 cr for the stub period — but the bleeding has slowed dramatically: KTM’s operating profit (EBITDA) swung from −€56m to +€5.5m in the March 2026 quarter, its first positive operating quarter in years, and production restarted at Mattighofen in July 2025. KTM exports from India revived from near-zero to 17,500 units in Q4. The catch: European demand itself was still soft, dealer inventory is still high (~105,000 bikes), and management gives no firm break-even date — only “benefits in the latter part of 2026.” Next to watch: the first full-year consolidated KTM loss figure; whether European retail (not just dealer destocking) turns; CY2026 H2 operating profit.
2. Bajaj Auto Credit, the captive lender — 🟢 on track, but young. The loan book doubled to ~₹19,000 cr, profit went 12× to ₹665 cr at a healthy 23% return on equity, capital adequacy is comfortable (19.5%), rated AAA. It finances ~40–45% of Bajaj’s own bike sales — capturing a margin that used to leak to outside lenders. The family already proved at Bajaj Finance they can run lending well. The one risk is the oldest in the book: a captive lender can flatter sales by loosening credit. The loan book is young (credit cost ~3.65%), so the test comes as it seasons. Next to watch: bad-loan trend as the book ages; AUM growth vs credit cost.
3. Domestic motorcycle share — 🟡 lost ground, now recovering. This is the soft spot in the story. Bajaj’s share of the 125cc-plus segment slid from ~32% (FY20) to ~22% (most of FY26), ceding ground to Royal Enfield and TVS. Then the second half turned: a September 2025 GST cut and a strong festive season, plus 10 refreshed Pulsar variants, drove Q4 domestic motorcycles up 24%, with the new N/NS Pulsars growing at twice the industry. Management calls the share recovery “secular.” But they also warn the GST benefit is partly rolling back via price hikes, and a steep commodity-cost spike (3.5–4% of revenue) is hitting Q1 FY27. Next to watch: whether the H2 share gains hold into FY27 against price hikes and supply hiccups.
4. Exports & EV — 🟢 the two engines actually firing. Exports rose 21% to a record $2.2bn despite Nigeria running at half its peak and the Middle East effectively shut by geopolitics — Latin America has now grown 11 quarters straight. Management guides to 220,000 units/month in FY27, having delivered the 200k target. On EV, Chetak crossed 5 lakh units and ₹4,000 cr revenue, holds ~23% e-scooter share (helped by rival Ola Electric’s collapse), and — crucially — the electric portfolio hit double-digit operating margins for the first time. Next to watch: Nigeria climbing back above 50% of peak; can Chetak retake outright #1 from TVS; sustained EV margins.
The watch-list
- KTM operating profit turns and holds positive through CY2026 H2 (🟢 thesis working) vs another loss-quarter or a write-down (🔴 breaking).
- Domestic 125cc+ share climbs back toward the high-20s% (working) vs slips below 20% again (breaking).
- Chetak reclaims the #1 e-scooter slot from TVS and EV margins stay double-digit.
- Exports run-rate hits 220k units/month and Nigeria crosses 50% of peak.
- Bajaj Auto Credit credit cost stays under ~4% as the loan book seasons.
- Q1 FY27 margin: does the 20%+ EBITDA margin survive the 3.5–4% commodity-cost shock (price hikes only cover ~40% so far)?
QGLP scorecard (the Motilal Oswal lens) — the receipts
“RoE” = profit earned per ₹100 of owners’ money. “OPM” = operating profit margin, profit per ₹100 of sales before interest/tax/depreciation. “Terms of trade” = whether suppliers fund the business or it funds its customers.
| # | Question | Score | Evidence |
|---|---|---|---|
| Q — Quality of Business | 6/6 | ||
| 1 | Large opportunity? | 1 | India 2W/3W under-penetrated; exports to ~79 countries; EV + premium upcycle. Huge runway. |
| 2 | Industry structured favourably? | 1 | 2W is a 5-player oligopoly; Bajaj ~90% of CNG 3W. OPM stable 16–21% for a decade = pricing discipline. |
| 3 | Defensible moat? | 1 | Brand (Pulsar/KTM/Triumph), export distribution, 3W dominance. RoCE beat cost of capital every one of last 11 years. |
| 4 | Return ratios >15%? | 1 | RoE 29.1%, RoCE 28.2%; RoCE history 23–45% every year. Best-in-class. |
| 5 | Asset-light? | 1 | Core capex ₹500 cr vs FCF >₹8,000 cr. A See’s-candy cash fountain. |
| 6 | Favourable terms of trade? | 1 | Debtors/Creditors ≈ 26%; cash-conversion cycle negative (−11 to −29 days) for a decade. |
| Q — Quality of Management | 5.5/6 | ||
| 7 | Unquestionable integrity? | 1 | ~55% promoter, 0% pledged; no SEBI action; clean standalone audit; hedging only. (Note: FY26 consolidated audit carried a KTM-integration qualification — technical, well-explained.) |
| 8 | Proven execution? | 1 | Pulsar turnaround, export build-out, 3W dominance, EV pivot; hit the 200k/mo export guide. |
| 9 | Growth mindset? | 1 | Heavy reinvestment in EV, KTM, Triumph, exports, captive finance. |
| 10 | Superior capital allocation? | 1 | 3 buybacks in 4 years at premiums; 100% FY26 payout; reinvests at ~28% RoCE. KTM is the one “show-me.” |
| 11 | Succession plan? | 0.5 | Rajiv Bajaj (59) is the brand; no announced heir. Deep professional bench mitigates. Real key-man risk. |
| 12 | Minority interests protected? | 1 | Generous, premium buybacks + dividends; no value leakage found. |
| G — Growth | 4.5/6 | ||
| 13 | Structural tailwind? | 0.5 | Broad 2W ≈ GDP growth (mature); the segments Bajaj plays (premium/EV/exports) grow faster. |
| 14 | Volume-led? | 1 | FY26 volumes +10% to record 5.1m units; growth volume-led plus richer mix. |
| 15 | Operating leverage? | 1 | OPM 16% (FY22) → 18 → 20 → 21% (FY26 record). Margins expanding with sales. |
| 16 | Manageable leverage? | 1 | Core auto net-cash with ₹18,000 cr surplus. Consolidated debt is NBFC + KTM, not parent. |
| 17 | Market-share gain potential? | 0.5 | LOST domestic 125cc+ share (32%→22%), recovering in H2; gaining in exports/EV/3W. |
| 18 | Earnings growth >15%? | 0.5 | Core PAT CAGR ~13–14% (3–5yr); standalone FY26 +21%. Borderline. |
| L — Longevity | 4.5/5 | ||
| 19 | Relevant for 10–15 years? | 0.5 | Personal mobility is durable; but ICE→EV transition resets part of the moat (managed well via Chetak). |
| 20 | Extend competitive-advantage period? | 1 | Brand + export moat durable; EV keeps it relevant. RoE durability strong. |
| 21 | Sustain growth-advantage period? | 1 | Long runway: exports (low penetration in Africa/Latam), EV, premium. |
| 22 | Diversification headroom? | 1 | Exports, KTM/Triumph premium, EV, captive finance — lots of optionality. |
| 23 | Adaptive culture? | 1 | Survived scooter→motorcycle and ICE→EV pivots; resilient through cycles. |
| P — Price | 0.5/2 | ||
| 24 | Valuation reasonable vs growth? | 0.5 | PEG ≈ 1.5–2.0 (P/E 26 ÷ ~13–16% growth). Full, not egregious. |
| 25 | Margin of safety (PEG<1 / payback<1)? | 0 | 5-yr payback ≈ 4.3x; PEG >1. No margin of safety at CMP. |
| Total | 21/25 |
The pillar pattern is stark: quality is near-perfect (11.5/12), the business will endure (longevity 4.5/5), growth is good-not-explosive (4.5/6) — and Price is the only thing keeping this off the clear buy-list (0.5/2). This is the textbook profile of a wonderful business at an unwonderful price.
Buffett lens (the Berkshire-letters read)
| # | Test | Verdict | Evidence |
|---|---|---|---|
| 1 | Good boat? | PASS | Great core: ~28% RoCE on tiny capex. “A good boat matters more than a good rower.” |
| 2 | Moat + pricing power? | PASS | OPM held 16–21% through commodity spikes; RoE > cost of capital 11/11 years. A franchise. |
| 3 | See’s test (returns on little capital)? | PASS | Core capex ₹500 cr vs core FCF >₹8,000 cr. Throws off cash, doesn’t swallow it. |
| 4 | One-dollar test (capital allocation)? | PASS | Market value compounded; premium buybacks; reinvests at high RoE. (KTM the lone question.) |
| 5 | Owner-oriented, candid? | PASS | ~55% unpledged skin; famously candid CEO; 100% payout. “We eat our own cooking.” |
| 6 | Integrity / forensic? | PARTIAL | Core profit fully cash-backed historically (CFO/OP 82–124%). But FY25 OCF went negative and the balance sheet ballooned — explained by the NBFC loan book + KTM, plus a qualified consolidated audit. Explained ≠ invisible. |
| 7 | Circle of competence / predictability? | PARTIAL | Core 2W/3W is simple and durable; bolting on a European turnaround + a lending book makes the consolidated entity less predictable than the old pure-play. |
| 8 | Mr. Market — gift or trap? | PARTIAL | P/E 26 near 52-wk high; PEG >1. Not euphoric for 29% RoE, but no fearful discount either. Not a gift today. |
| 9 | Patience / compounding runway? | PASS | Long runway in exports + EV; RoE durable. “Our favorite holding period is forever.” |
| 10 | The honest red flag | (see Conviction) | Strongest bear: a maturing, share-losing core dressed up by a glamorous-but-loss-making acquisition. |
Score: 7.5 / 10 — a real, high-quality business that just misses Buffett-grade (8+), held back by price (test 8) and the predictability/forensic noise the NBFC + KTM introduce (tests 6–7).
The See’s test, spelled out. See’s Candy needed $32m of reinvestment over 35 years and threw off $1.35bn. Bajaj’s core auto business is cut from the same cloth: in FY26 it spent ₹500 cr on capex and generated over ₹8,000 cr of free cash. It does not need its own cash to grow — which is why it can hand back 100% of profits and still sit on ₹18,000 cr. This is the marrow of why it’s “Great.”
The one-dollar test, spelled out. Buffett’s rule: each rupee retained should create at least a rupee of market value. Over a decade Bajaj reinvested into Pulsar, exports, EV and KTM/Triumph while holding RoE near 25–29% — and the market value compounded right alongside book value. When it couldn’t find a rupee’s worth of opportunity, it didn’t empire-build at home; it returned the cash through premium buybacks (₹4,600 → ₹10,000 → ₹12,000) and a 100% dividend. The single asterisk is KTM: a rupee retained there has, so far, bought a loss-making business. The bet may pay — but it’s the one place the test is still pending.
The framework metrics
- Economic Profit = Net Worth ₹38,832 cr × (RoE 29.1% − CoE 12%) = +₹6,640 cr. Strongly creating value above the cost of owners’ money. Top-quintile.
- Terms of Trade = Debtors ÷ Creditors ≈ 26% — deeply favourable (suppliers fund the business). Note: working-capital days turned positive in FY26 only because the consolidated NBFC loan book sits in current assets; the core trade cycle is still negative.
- 5-yr Payback = Mcap ₹2,81,343 cr ÷ projected cumulative 5-yr PAT ≈ ₹66,000 cr (core PAT ~₹9,000 cr growing ~13%) = ~4.3x. Far above the <1x multibagger signal — i.e. you wait years for earnings to “pay back” the price.
- PEG = P/E 26.1 ÷ ~13–16% growth = ~1.5–2.0x. Price discipline not satisfied.
- RoE − CoE spread = ~17 points, and RoE > 15% in all of the last 11 years. A wide, durable “uncommon profit.”
- Consistent vs Volatile = CONSISTENT. Net profit (FY15→FY26): no single-year fall exceeded ~7%, none >50%, terminal > initial. By the studies’ rule, value it on P/E (not P/B) — which the market does.
CoE assumed 12% (the studies’ mid-point; 10% in WCS-28, 15% as the “uncommon-profit” hurdle). Growth assumption: ~13% core PAT CAGR, stated.
Peer comparison
| Company | Mcap (₹cr) | CMP (₹) | P/E | P/B | RoE | RoCE | OPM | Sales (₹cr) |
|---|---|---|---|---|---|---|---|---|
| Bajaj Auto | 2,81,343 | 10,066 | 26.1 | 7.3 | 29.1% | 28.2% | ~21% | 62,905 |
| Hero MotoCorp | 99,544 | 4,975 | 17.1 | 4.6 | 28.5% | 35.8% | 15% | 47,411 |
| TVS Motor | 1,63,568 | 3,443 | 53.6 | 17.1 | 33.8% | 17.4% | 15% | 56,070 |
| Eicher Motors | 2,08,781 | 7,611 | 37.6 | 8.3 | 24.0% | 30.5% | 25% | 23,408 |
FY26 figures, each from its own screener snapshot. On price, Bajaj sits mid-pack — dearer than Hero (the value play: cheapest P/E, fattest 3.7% dividend yield, highest RoCE, but the lowest-growth/least-premium mix) and far cheaper than TVS (53x, priced as the growth darling, though its consolidated numbers are inflated by its own large NBFC, TVS Credit) and Eicher (38x, Royal Enfield’s fat 25% margins earn a premium).
The relative read softens the absolute one. On the strict QGLP price bar Bajaj fails — but inside its own asset class it is not expensive: you’re paying 26x for arguably the most diversified franchise of the four — the only one that is simultaneously the world’s #1 in three-wheelers, India’s #1 exporter, a top-2 EV player, and an owner of two global premium brands (KTM, Triumph). A sector-allocator could reasonably call Bajaj the best risk-adjusted value of the set; a strict value-investor still waits for a better entry. Both are right — they’re answering different questions.
Latest quarter & what’s happening now
Q4 FY26 (reported 6 May 2026) was a record. Standalone revenue ₹16,006 cr (+32% YoY), EBITDA ₹3,323 cr at a 20.8% margin, PAT ₹2,746 cr (+34%). Volumes hit an all-time quarterly high of 13.7 lakh units (+24%), and growth was unusually broad — 2W, 3W and exports each grew ~20–30%. Full-year FY26: standalone revenue ~₹58,700 cr (+17%), EBITDA >₹12,000 cr (margin 20.5%, +30 bps), standalone PAT ₹9,825 cr (+21%). Consolidated PAT was ₹10,574 cr, but ~₹1,600 cr of that is one-time KTM accounting gains (fair-value remeasurement + currency-reserve reclassification) — so read the standalone ₹9,825 cr as the clean core. (HARD)
Concall takeaways: (1) management elevated Rakesh Sharma to Joint MD from 1 June 2026 — orderly leadership deepening. (2) Outlook is cautious for Q1 FY27 — a sharp commodity-cost spike (3.5–4% of revenue), price hikes covering only ~40% of it so far, and domestic motorcycle growth cooling from 20% to a guided 7–9% as GST benefits partly reverse (MEDIUM). (3) A weak rupee (₹94–95/$, unhedged) is a real tailwind. (4) The 100% payout — ₹4,192 cr dividend + ₹5,633 cr buyback at ₹12,000/share — needs a shareholder vote (buyback exceeds 10% of reserves) and should pay out by ~mid-July 2026 (HARD/MEDIUM).
Where the two lenses agree — and disagree
They agree on almost everything that matters. Both call the core business Great (Buffett test 1 = PASS; QGLP Quality 11.5/12). Both see a real, durable moat and best-in-class returns. Both flag the same single problem: price. QGLP’s Price pillar scores 0.5/2; Buffett’s Mr. Market test is only a PARTIAL. The arithmetic is identical — PEG >1, payback >1, near the highs.
Where they part is subtle but important. The QGLP checklist, being a quality scorecard, is comfortable scoring management integrity at near-full marks (clean record, unpledged, generous). The Buffett letters are harsher on two things a checklist under-weights: the forensic read (test 6) and predictability (test 7). Both come out only PARTIAL — not because anything is dishonest, but because bolting a fast-growing lending book and a just-rescued European bankrupt onto the accounts makes the consolidated picture genuinely harder to read and harder to predict than the simple cash machine of five years ago. That divergence is the signal: trust the core, but respect that Bajaj in 2026 is a more complicated animal than Bajaj in 2021 — and you’re being asked to pay a premium price for it during exactly that complication.
Margin-of-safety price band
Not a recommendation — the framework’s arithmetic.
- Strict QGLP price bar (PEG ≤ 1x): at ~14% core growth, P/E
14 on core EPS (₹322) ≈ ₹4,500. Add a notch of generosity for the franchise quality and you reach ₹5,000–5,800. This is the stern value-investor’s number, and as always for a quality compounder it sits far below the market price — it essentially only appears in a crash. - “Quality at a fair price” vs its own history: Bajaj has historically traded ~16–22x. On core earnings, ₹7,000–8,000 (roughly 18–20x core EPS, near the 52-week low of ₹7,858) is where the price stops fighting the quality and a sensible owner gets a margin of safety against the live risks.
- CMP ₹10,066 (~26x, near the all-time high) is demanding — it prices in the domestic-share recovery holding and the KTM turnaround working. Plainly: a wonderful business at a full price. Mr. Market is closer to greedy than fearful on this name today.
Conviction texture
The bull case, at its strongest. You’re buying a Great, asset-light cash fountain with a widening moat in its two best engines (exports and EV), run by an owner-operator with ~55% unpledged skin and a decade of premium buybacks. The core is net-cash with ₹18,000 cr spare. The KTM losses are shrinking (first positive operating quarter), the captive lender is compounding at 23% RoE, Chetak is a top-2 EV winner riding a collapsing competitor, and the rupee is a free tailwind. If the H2 domestic-share recovery holds and KTM breaks even in 2026, the “complication discount” reverses and you own the most diversified two-wheeler franchise on earth.
The bear case, at its strongest (the honest red flag). Strip away the glamour and the core domestic motorcycle business has been losing share — from 32% to 22% of the 125cc+ segment — and is maturing toward GDP-type growth. The dazzling consolidated PAT (+47%) is partly KTM accounting one-offs; the clean number grew ~21%, and faces a 3.5–4% commodity-cost wall next quarter. Onto this maturing core, management has bolted a loss-making European bankrupt (qualified audit, no break-even date) and a young, unseasoned loan book that could be quietly flattering bike sales. And you’re asked to pay 26x, near the high, for all of it. The polite word is “complicated”; the blunt one is that you’re paying a premium for a recovery and a turnaround that haven’t been delivered.
What the numbers actually support: the quality is not in question — Economic Profit is hugely positive, returns are best-in-class, the balance sheet “scare” is explained, and the business is a Consistent, Enduring wealth creator. The price and the two show-me stories are where the risk lives. Watch the KTM operating-profit line, the domestic 125cc+ share, and the Q1 FY27 margin — those three will tell you within two quarters whether you’re early or late.
No buy/sell/hold — the quality is a clear yes; the price is the reader’s call.
Sources
- Screener: https://www.screener.in/company/BAJAJ-AUTO/consolidated/ (snapshot fetched 2026-06-20)
- Concalls: Q4 & FY26 earnings call, 6 May 2026 (Rakesh Sharma, Dinesh Thapar) — KTM consolidation structure, BACL metrics, 100% payout, Q1 FY27 commodity/demand outlook. Q3 FY26 call, Feb 2026.
- Annual Report FY25 (18th AR): chairman/MD letter, segment reporting, governance, Rajiv Bajaj reappointment to 2030.
- Peers: screener snapshots — Hero MotoCorp, TVS Motor, Eicher Motors (FY26).
- KTM / management web research (dated, sourced): Bajaj full control 18 Nov 2025 (Motorcycle.com, ZigWheels, DriveSpark); rescue package ~€800m (Outlook Business; business-standard.com); KTM 2024 EBIT loss ~€1.19bn & restructuring (ainvest.com; Autocar India); Bajaj Mobility Q1-CY26 +€5.5m EBITDA (RideApart; webdisclosure.com); BACL metrics (CARE Ratings 6 Apr 2026; Business Standard 18 Apr 2024); buyback history & ₹150 dividend (Business Today 6 May 2026; Upstox); promoter holding unpledged (Trendlyne); Chetak share (Autocar India; cartoq.com); domestic share erosion (autocarpro.in).
- Assumptions: Cost of equity 12%; core PAT CAGR ~13% (FY26 consolidated PAT adjusted down ~₹1,600 cr for KTM one-time gains). “79 countries” export figure approximate (sources vary 70–108).