Joint Managing Director (effective June 2026), Bajaj Auto Limited
Strong Q4 For Bajaj Auto | There Has Been Strong Growth Post GST Relief, Says Company | CNBC TV18
#4QWithCNBCTV18 | Bajaj Auto Reports Robust Q4FY26 Numbers
Executive Director, Rakesh Sharma to CNBC-TV18
Post GST, have seen strong growth with Q4 seeing over 20% growth
There has been some deceleration in motorcycle demand
Not looking for an acquisition in EV business
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About Rakesh Sharma
Rakesh Sharma, who became Joint Managing Director of Bajaj Auto in June 2026, has been discussing the company's performance and strategy in several media appearances. He stated that Bajaj Auto's electric vehicle business now contributes about 30% of domestic revenue, describing the electric scooter and three-wheeler segments as growing strongly. Sharma said the company plans to increase its total production capacity from approximately 7 million units per annum to over 9 million units, citing the demand outlook. He noted that exports have been a highlight, with a monthly run-rate above 250,000 units, though he attributed some shortfall in May 2026 to supply chain and logistics disruptions. Sharma commented on market conditions, saying the "bottom half of the market is really underperforming" while the 150cc-plus motorcycle segment was growing at 25%. He described the second quarter of FY27 as a "very busy quarter" focused on preparing a refreshed product lineup for the festive season starting in October. Regarding the Delhi electric vehicle policy, Sharma said the industry had been in dialogue with the government and expressed the view that allowing hybrid products would have made the policy "more balanced." He reiterated the company's existing policy of distributing 90% of profits through dividends and buybacks.
Transcript (20 segments)
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Interviewer0:00
All right. Well, I think let's welcome in our next management. It's the corporate earnings treadmill, right? Running from one to the other, but that's earning season for you. Bajaj Auto reported a strong set of fourth quarter numbers. Profits were up 34%, margins came in healthy, and let's take it up with Rakesh Sharma, who is executive director of Bajaj Auto. Do also note that Mr. Sharma has now been elevated to the role of joint managing director effective June 2026. Mr. Sharma, congratulations from all of us here. Good morning and congratulations.
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Rakesh Sharma0:34
Thank you very much. Good morning.
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Interviewer0:36
Sir, let's just start this conversation. We'll get to many of the numbers, but I just want to start with the other expense number, which is coming about 7% higher. It's about 26% growth on a year-on-year basis, where volume growth is about 24% on a year-on-year basis. Could you give us a sense of what this is? Is this all marketing spends? And what's the trajectory of this going to be in the future into FY27?
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Rakesh Sharma1:09
Yeah, it's not a very significant number for us and it's a one-off, largely driven by things like marketing and all that. So, it's not a really material line which we are monitoring.
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Interviewer1:23
What is marketing spend as a percentage of revenue, sir? Is that number likely to stay the same in '27 as well?
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Rakesh Sharma1:33
I'm not fully informed on the exact details of the breakup of that other expenses. I could get you a more detailed line which you can put out later in your show. But this is largely marketing spends, which you're calling a one-off. It's a combination of things. That's why it's not one significant jump.
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Interviewer2:04
Mr. Sharma, good morning. Now, you flagged off a cost inflation of 350 to 400 basis points in Q1 as things stand currently. And you've also gone on to say that only 40% of that has been passed on via price hike. Does that mean we're going to see margin pressure in Q1? If yes, what would it be? Nomura has an estimate of 100 to 150 basis points of margin compression. So, that's point number one. What do margins look like in Q1? And two, would you be looking to pass on the balance cost inflation via further price hikes? And if yes, can you quantify that?
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Rakesh Sharma2:37
Yes, the cost scenario is indeed looking inflationary almost all across the raw material pallet, led by things like aluminum, noble metals, and polymers. We have sensed about 4 to 5% inflationary trend in terms of revenue. 40% of this was passed on on 1st of April. Having said that, the situation is evolving. It is not as if things get concluded for a period of time, let's say a quarter or so, but this is evolving almost on a monthly basis. The great mitigating factors for us are that the US dollar realization, the rupee realization, is helping us mitigate this inflation. Also, the mix for us and the operating leverage have been very useful in mitigating the inflation. And therefore, we are going to look at pricing in a very dynamic manner month on month and try to understand its potential impact on demand, observe what competition is doing, and how the raw materials are trending. So, it would be a very dynamic area to manage.
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Interviewer4:07
Price variation increases will be dynamic, but in Q1, will there be margin pressure? Margins lower than Q4? And if yes, can you give us an indication of how much?
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Rakesh Sharma4:18
That's exactly what I said. We have taken 40% already on 1st of April. Now, let's see how the situation evolves in May. We will address it after evaluating the benefits from the exchange rate, look at competition, and again look at the final settlement on pricing and raw material pricing, and then take a pricing advantage. So, I can't tell you exactly the basis points to which the margin will go down. But yes, there are headwinds which one is facing. Now, it depends on how we solve for that, whether we solve for it through pricing and accept the consequential impact on demand, or we go for demand and not solve through pricing.
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Interviewer5:11
You've also guided for a 7 to 9% industry growth. That's lower than the kind of growth we've seen in the last couple of months, which has been super strong. So, can you tell us the reason behind that? And to any extent, has demand been weak on account of the Middle East crisis or the price hikes that the industry has already taken?
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Rakesh Sharma5:28
Yes, particularly the motorcycle segment, there has certainly been a deceleration between quarter four and April. Our forecasts are based not on some estimates, but purely looking at how April has panned out and an extrapolation of what has already happened, because it's very difficult to simulate the future with so many moving parts. As you know, post-GST, there was quite strong growth of almost 20%. In Q4, the motorcycle industry grew 24% in terms of registrations and only 9% in April. However, there is a little bit of shifting of the mini season, which is the Navratri, the Gudi, and the Gudi Parva type of festivals, which this year were in March and last year were in April. So, there is a little bit of base effect, but then there are also price increases which have been put in place. There is a dampening of consumer sentiment because the LPG shortages have entered into every kitchen in India, and people are influenced by that. So, because of all these factors, we are seeing a softening. But importantly, it would be good to unpack this 9% we have seen in April. We see continued strong growth in particularly the 150cc plus segment, which is still growing at high double digits, high teens, and a rapid deceleration in the bottom half of the market.
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Interviewer7:21
Hi Mr. Sharma, congratulations on your new role and wishing you all the very best. I have two questions for you. One is on the buyback. What's the clarity with regard to the promoter entity participating or not?
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Rakesh Sharma7:33
Well, the promoters are not participating.
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Interviewer7:37
All right, makes it more lucrative for shareholders. And just one query to clear out all the doubts and rumors we hear in the market. Do you think strategically, Ola as an investment makes any strategic sense to Bajaj Auto, or there's no way you're going down that path?
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Rakesh Sharma7:56
Well, we are not looking for any acquisitions in the EV sector within the country. That much I can tell you.
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Interviewer8:04
Just to take that point forward, Mr. Sharma, how is competitive intensity in that arena looking like? It's a topic we've discussed in the past as well. Is it on the uptrend? Is it stable now?
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Rakesh Sharma8:18
You mean in the electric scooters side? Well, the competitive intensity remains as it has been. Over the last year, there has been a tremendous consolidation in favor of the top three players. But within the top three, there is a very strong intensity, which is played out through pricing, marketing, product introductions, and distribution management. We expect that to continue. However, the great thing is that consumer sentiment is strongly showing a preference for the electric side. And with more fuel increases which seem to be in the offing, we definitely feel that this segment will grow fast. So, competitive intensity in a segment which is growing very rapidly is fine.
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Interviewer9:22
Okay. And we've not seen those price increases yet. Hopefully, we will not before the situation corrects and prices come off. But maybe we will. That push towards electric, as you're saying, is becoming more apparent. Thank you very much, Mr. Sharma. Appreciate you joining us and congratulations once again for the step up. Good speaking with you.
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Rakesh Sharma9:44
Thank you. Thank you very much.