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Bajaj Auto, which sold more than 2.2 million vehicles, including both two-wheelers and three-wheelers, in the first half of Financial year 2025, expects its sales to reach around 4.5 million by the end of the year.
Rajiv Bajaj, Managing Director, suggested that the total sales could be even higher due to a significant rise in exports, which are estimated to increase from 140,000 to between 170,000 and 180,000 units per month. In an interview with CNBC TV18, Bajaj also highlighted that with new models like the Pulsar 125 being introduced and increased production of the Freedom and Chetak, Bajaj Auto could potentially reach around 4.7 million vehicles for the year.
In September this year, Bajaj Auto sold 469,000 units, compared to 392,000 units in September 2023, showing a growth of 20%. Additionally, the company’s market capitalisation is approximately ₹2,90,351.12 crore, and its shares have risen by nearly 92% over the past year.
Below is the verbatim transcript of the interview. Q: CNBC-TV18 also spoke to the Federation of Automobile Dealers Associations (FADA), earlier, who believe that two-wheeler sales growth during the festive season will still be in double digits, but Bajaj Auto has slashed its festive estimates to 3-5% which is below industry expectations. Why is that? A: The short answer to your question would be that the FADA is likely to be correct and let me explain why I believe so.
When we are talking of festive sales, before we talk of the numbers themselves, we have to dwell a little bit on the qualitative context in which those numbers are being delivered. What I mean is that everybody is talking about the growth in terms of the Vahan registrations, but the other important information is the dealer retail to customers. Also Read | September Auto Sales: Bajaj Auto sells 20% more vehicles in September than last year The Vahan information is the correct basis for discussion because that is in the public domain whereas the dealer retail to customers is the private domain of each manufacturer.
What happens in a typical month through the year is that this retail lags the registration by a few days to a week or a little more depending on the state that we are talking about. But at the festive time, the gap becomes considerable. For example, on the day of our board meeting last week, our motorcycle Vahan registration was only about 2/3rd of our dealer retail.
Now this happens particularly so every few years in a month like October where you have a double whammy of Dussehra and Diwali, of course in a positive sense, happening in the same month. That tends to completely overwhelm the RTOs and the dealers and customers also, obviously get very busy in a month like this. So, what is happening here is that when you use the same instrument to measure this month as you do the rest of the months of the year, you are likely to capture a moment in time which does not represent the holistic picture.
So, what we said about the growth as it stood in terms of Vahan registrations about 10 days back was based on the data at that time. But as the weeks evolve, and we come to, let's say, early December, when Rakesh Sharma, Executive Director of Bajaj Auto , will speak with CNBC-TV18 again, we may well turn around and say that now the growth is closer to double-digit and not lower single. Q: What would be your estimate as of now on festive sales from Bajaj Auto? A: Let me give you the bigger picture.
First of all, the data that we are all seeing in Vahan is a composite two-wheeler data. It does not give you the breakup. So, each company has to infer for itself and of course, we informally compare with each other.
So, there is a component of scooter and moped sales that I cannot comment on because we do not participate in the internal combustion engine (ICE) scooter and moped segment. In motorcycles, as you are aware, there is a trend over the last several years that the 125cc plus industry, which used to be about 35% of the domestic motorcycle industry is now up to 55% and obviously a trend like that is not going to reverse and within that Bajaj Auto has been, particularly in last three quarters, going from strength to strength. And again, a company's portfolio cannot go sour suddenly overnight in a particular month.
Also Read | India retail vehicle sales decline 9% in Sept, FADA urges OEMs to tackle record high car inventory Now, to answer your question more directly, based on how we infer the breakup in the Vahan data, we see ourselves at this time in the 125cc plus segment, which is the segment of our focus, growing about 40% higher than the industry rate, and that has been the trend for the last so many quarters because of which we are close to market leadership. Q: So, 40% growth in the 125cc plus segment. Has anything been a drag on festive sales, something that you had not anticipated? A: I must correct you, if I understood you right, we are not growing at 40%.
We are growing 40% faster than the industry in our understanding. Coming to what may be some extraneous factors, as you ask. Well, there is one, which is simply this, that the 100cc market right now is faced with very steep and deep discounts by two of the largest players.
As I mentioned before, since this is not an area of focus for us, we do not have, if I may say so, a rupee discount on our products in this space. So as a result, one may see, for a short period, till the end of the festival that both the 100cc industry, which has come down to about 45% of the total industry, may show a bit of an uptick. Similarly, the shares of those who are discounting are also going to show a little bit of an uptick because this is nothing but a preponement of sales from subsequent months.
After all, you do not change the trend with ₹ 5,000 discount on ₹ 1 lakh product. One might say that this is the choice Bajaj Auto has made to stay away from that. And that may, in that sense, show us in a somewhat poor light in that segment at this point.
But business is not just one-dimensional, right? It's not just sales, it's also on the bottomline. I mean, there is a reason why our EBITDA percentage is double that of the industry and market capitalisation is almost thrice of the other major players. Q: Any plans to cut back on production from here onwards and for any particular segments? A: Not really.
We are going flat out in October because obviously, this is the peak month. We have to go flat out in November also in terms of production per day basis because the Diwali holidays take away three or four working days at that time and even when work is restored, there is disruption due to absenteeism. And I can tell you, the main reason why we need to go flat out is not only because our domestic portfolio continues to do well.
If you have some time later, we can talk about especially the Freedom, the Chetak, the Triumph, the KTM, and, of course, the Pulsar, and of course the three-wheelers. We are looking at 50,000 plus per month in sales for the three-wheeler in both October and November, if we can produce that. But I must share with you that we are seeing really good traction finally with export, it's a question that CNBC-TV18 anchors have been asking Rakesh Sharma for the last year or so.
Last month, as you are aware, we clocked exports of 156,000; after a long time, we exceeded 150,000. This month we are looking at 170,000 and next month I believe we should be closer to 180,000 which is near our pre-COVID normal of 200,000. So that is what is going to mainly drive the factories incrementally this month and next.
Q: You have already answered that you are possibly going to see double-digit growth when we see your numbers by December. What will be the growth drivers here onwards for Q3 (FY25) and Q4 according to you? A: They will be the same that they have been in recent quarters, starting with the Freedom, the CNG motorcycle, I am pleased to say that we seem to be on course to make and sell as many as 30,000 Freedoms this month, and all of that as per the data that I see in terms of retail, is getting retailed out, and they are bound to show up in registration by the end of November. Rakesh Sharma has already said that he needs capacity up to 40,000 and he is sitting in Brazil and contemplating the next incremental step for capacity on the Freedom.
So that is good. The Pulsar will continue to drive it. If you again look at Vahan data for the states where we are relatively weak in Pulsar, like the large markets of Uttar Pradesh (UP), Bihar, Jharkhand, and West Bengal, we have gained a lot of share in the recent quarters.
Also Read | Bajaj Auto eyes double-digit growth as motorcycle segment surges, Chetak scooter sales climb The Triumph has been received well and in the next quarter, that is the last quarter of this year, you will see two or three new KTMs, which for me at least, are very exciting. They are all new; these are not upgrades, these are completely new KTMs. Chetak with a bit of luck, we can strike 30,000 again on the Chetak this month, which is well above our capacity.
So, we have done a lot of work to improve productivity there that, as I told you last time we spoke, we are pushing up to 40,000 by April next year. And of course, the three-wheelers are doing well and the exports I just told you about. So, on all these six, the growth is continuing nicely, and if I may say so, profitably.
Q: In your Q2 earnings call, your team said that a refreshed range of Chetak will be out by mid-November and this will significantly improve the margin structure as well. What can customers expect from the refresh range of Chetak? A: Yes, it is true that from mid to end November up to January 2025, in that period of about two months, we will refresh the entire Chetak portfolio, and we will give consumers even more of what they desire at the core of an electric scooter, first and foremost reliability because I believe Chetak is today considered perhaps one of the most reliable, if not the most reliable e-scooters in the market, in every sense, for various reasons. I will not go into those details right now.
So, more reliability. We will have a bigger battery, so obviously, more range, better charging capacity, a little more of some of the more secondary attributes like storage space, floor space between your feet or ahead of your legs, and stuff like that. We just make this scooter more comfortable.
And yes, from our point of view, there is a very significant reduction in cost with this third or fourth-generation Chetak. So, I am happy that we are moving up that learning curve nicely. Q: Specifically, I would like to ask you about any plans to pre-pone any launches.
You have mentioned a refreshed Chetak range, and you have mentioned new KTMs, anything that you plan to prepone to excite the sentiment? A: Not really. That is not possible. I mean, in a certain sense, our product plans are always a function of the overall capacity of the organisation.
So, it's difficult to prepone something just like that. But yes, I will say that the one thought I shared with you is that we would like, in the next financial year, to participate in the e-rickshaw market from the e-auto and e-cargo, which, by the way, we are doing very well again. You have seen last month’s Vahan data and I am sure that we are neck to neck for leadership there in just 15 months after launch.
So, the e-rick will take our three-wheeler business to a completely different level, and that is something we want to start as early in the next fiscal as possible so that we benefit from it throughout the year. So that would be one but otherwise, no change. Q: What would be your outlook for the full FY25 this is something that a lot of people would want to know.
A: In the first half, our cumulative volume, two-wheelers, three-wheelers, domestic, export, everything put together is a little more than 2.2 million, if I remember that right. And I would say on the one hand, it would be at least that much, which means about 4.
5 million by the end of the year. But I suspect it will be a little more than that, for the reason that if you look at the export component in the first half, it is about 850,000 vehicles, two and three-wheelers put together, which means about 140,000 a month in the first six months, which, as I just shared with you, we are looking now at numbers like 170,000-180,000 a month. Also Read | Festive auto demand | Contrasting views emerge as two-wheeler major reports slowdown, FADA disagree So, if we are going to on an average, and again, this changes by the month.
So, I may have a different number for you by December (2024) or January (2025). But as things stand now, if we are going to have just exports go up by 25,000 a month for the remaining six months, then that itself will add 150,000. Hopefully a little more traction in domestic sales, for example, we just launched the new Pulsar 125.
And of course, there will be production of Freedom and Chetak going up. So, all of this should point towards something like 4.7 million, but I think Rakesh Sharma is a better person to answer this question.
Q: Do you think the stock price correction that we saw last week, was it mainly due to the low festive sales outlook? A: I do not know why the stock corrected. I mean, a stock that has grown by almost 100% in 12 months has to correct at some point, I would imagine. But as far as I am concerned, I stand by my projection of ₹ 20,000 as the long-term target price in my head.
Not that I am an expert on this subject, as I have always said, but more importantly, I am certainly if I can go out and buy some stock because something that corrected 20% perhaps based on a somewhat temporary understanding of the evolving situation presents a nice upside in the weeks to come. Also Read | Rajiv Bajaj sticks to his long-term share price target of ₹20,000 for Bajaj Auto Q: Certain brokerages have downgraded the stock to sell from reduced, citing high valuations amid normalising growth. How would you address concerns about the high valuation of the stock? A: I do not think as a manufacturer, we can do anything It is typical of the stock market that it will lag for some time and then it will suddenly rise and then it will run ahead and then it will correct.
So, this is the volatility in the cycle that allows people to make money when they buy and sell. So that is the nature of the territory, that is the nature of the peace. We have to stay focused on the motorcycle market.
Q: Can you leave us with an overall outlook on the festive season? Do you expect double-digit growth when we look at the numbers in December? A: Yes, I would say so. Particularly, I must emphasize the area of our focus in the domestic motorcycle segment, which is the 125cc plus, certainly, that may not be the case in the 100cc, if I may say, so, so we could not care less. And of course, particularly with something like Freedom and with Chetak in e-scooter, I mean that growth is going to be tremendous.
I do not even want to try and calculate that number. Three-wheeler is going to be a handsome growth and exports looking good. So, that would be the big picture for the company as a whole.
For the entire interview, watch the accompanying video Catch all the latest updates from the stock market here.
