The Indian automotive industry is a dynamic space, and one of its key players recently shared its financial results for the first quarter of the fiscal year 2026 (April–June 2025). This company, a major force in the two-wheeler and three-wheeler markets, posted a solid performance with notable growth in profits and revenue, driven by strong exports and a growing electric vehicle (EV) segment. However, challenges like supply chain disruptions and declining domestic sales painted a mixed picture. Let’s break down the highlights, explore what’s driving the numbers, and discuss what lies ahead.
Strong Financial Growth in Q1 FY26
Profit and Revenue Surge: The company reported a 14% year-on-year increase in consolidated profit after tax (PAT), reaching ₹2,210 crore, up from ₹1,942 crore in Q1 FY25. Revenue from operations also climbed, hitting ₹13,133 crore, a 10% increase from ₹11,932 crore in the same period last year. Total income for the quarter grew by 11.21% to ₹13,642 crore. These figures reflect a robust financial performance, underpinned by strategic moves in key markets.
EBITDA and Margins: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at approximately ₹2,500 crore, but the EBITDA margin slipped slightly to 19.7%, down by 50–60 basis points from the previous quarter. This dip was largely due to lower dollar realizations and rising raw material costs. However, the company mitigated some of these pressures through an improved product mix and operating leverage, showcasing its ability to adapt to market challenges.
| Metric | Q1 FY26 | Q1 FY25 | YoY Change |
|---|---|---|---|
| Consolidated PAT | ₹2,210 crore | ₹1,942 crore | +14% |
| Revenue from Operations | ₹13,133 crore | ₹11,932 crore | +10% |
| Total Income | ₹13,642 crore | – | +11.21% |
| EBITDA | ~₹2,500 crore | – | – |
| EBITDA Margin | 19.7% | – | -50–60 bps |
What’s Driving the Growth?
Several factors fueled the company’s strong performance in Q1 FY26:
- Export Boom: Exports were a standout, with overall exports surging by 16%. Two-wheeler exports grew by 14% to 419,447 units, while commercial vehicle exports jumped by 32%. Strong demand in Africa, Latin America, and Asia, along with the resumption of exports to a restructured European partner, drove export revenues to an all-time high.
- Premium Motorcycles: The premium motorcycle segment, including high-end models, saw a 20% increase in domestic sales, surpassing 25,000 units. New launches in this category, such as rugged and stylish models, resonated well with consumers, particularly during the festive season.
- Electric Vehicles (EVs): EVs have become a cornerstone of growth, contributing over 20% of domestic revenue, up from the low teens a year ago. The company’s flagship electric scooter saw retail sales more than double, while its electric three-wheeler segment captured a 36% market share, with volumes growing nearly threefold year-on-year.
- Commercial Vehicles: The commercial vehicle segment, including auto-rickshaws, recorded a 7% increase in volumes to 162,446 units, marking eight consecutive quarters of over 100,000 retail sales.
Challenges on the Horizon
Despite the strong numbers, the company faced some headwinds:
- Domestic Two-Wheeler Sales Decline: Domestic two-wheeler sales dropped by 9% to 529,344 units, reflecting softer demand in certain segments. This decline weighed on overall sentiment, though gains in premium models helped offset some of the losses.
- EV Production Hiccups: A shortage of rare earth magnets disrupted EV production, particularly for the company’s electric scooter, leading to a 50% cut in output. This issue, which began impacting production towards the end of the quarter, is expected to persist into August and September 2025.
- Margin Pressures: The EBITDA margin contraction highlights vulnerabilities to external factors like currency fluctuations and commodity inflation. While the company managed these challenges effectively, they remain a concern for future profitability.
Dividend and Shareholder Value
The company has a strong track record of rewarding shareholders, making it an attractive option for dividend-focused investors. In the quarter ending March 2025, it declared a dividend of ₹210 per share, translating to a dividend yield of 2.57%. Over the past few years, the company has consistently paid dividends, with payouts ranging from ₹80 to ₹210 per share since 2021. Its surplus funds of ₹16,726 crore and free cash flow of ₹1,200 crore in Q1 FY26 underscore its financial health and ability to sustain these payments.
| Year | Dividend per Share | Ex-Dividend Date |
|---|---|---|
| 2025 | ₹210.00 | June 20, 2025 |
| 2024 | ₹80.00 | June 14, 2024 |
| 2023 | ₹140.00 | June 30, 2023 |
| 2022 | ₹140.00 | June 30, 2022 |
| 2021 | ₹140.00 | July 8, 2021 |
Shareholding Trends and Market Sentiment
The company’s shareholding pattern showed notable shifts in Q1 FY26:
- Promoter Holding: Remained stable at 55.04%, with a negligible 0.01% pledged.
- Foreign Institutional Investors (FIIs): Reduced their stake from 11.61% to 10.30%, with the number of FII investors dropping from 1,032 to 934.
- Mutual Funds (MFs): Increased their holdings from 6.54% to 7.08%, with the number of MF schemes rising from 41 to 43.
The stock experienced volatility after the Q1 results, initially slipping by nearly 4% before recovering. As of August 7, 2025, the share price stood at ₹8,178.50, with a market capitalization of ₹2,28,390.83 crore, ranking it 5th in the auto sector. Over the past year, the stock declined by approximately 16.3%, but it has delivered a strong 102.47% return over three years, reflecting long-term resilience.
Analysts remain largely optimistic, with a consensus “Buy” recommendation and a median target price of ₹9,268.72 from 37 analysts. Some brokerages highlight the company’s diversified portfolio, strong export engine, and growing EV presence as key strengths, though concerns about domestic market share and EV supply chain issues temper expectations.
How Does It Stack Up Against Competitors?
To put the company’s performance in context, let’s compare it with key competitors in the two-wheeler sector:
- Hero MotoCorp: Reported a flat standalone net profit of ₹1,126 crore and a 6% revenue decline to ₹9,579 crore. Total two-wheeler sales fell by 11% to 13.67 lakh units, indicating weaker domestic demand compared to the company’s marginal sales growth.
- Eicher Motors: Posted a 9% increase in consolidated net profit to ₹1,205 crore and a 15% revenue increase to ₹5,042 crore. However, its EBITDA margin declined to 23.86%, slightly higher than the company’s 19.7%.
- TVS Motor Company: Achieved a 34.86% increase in standalone net profit to ₹778.59 crore and a 20.36% revenue increase to ₹10,081 crore. Motorcycle and scooter sales grew by 21% and 19%, respectively, outperforming the company’s domestic two-wheeler sales.
While the company lags behind TVS in domestic sales growth, its strong export performance and EV market share give it a competitive edge. Its focus on premium motorcycles and electrification aligns with industry trends, though addressing domestic demand challenges will be critical.
| Company | PAT (Q1 FY26) | Revenue (Q1 FY26) | Sales Volume Change | EBITDA Margin |
|---|---|---|---|---|
| Bajaj Auto | ₹2,210 crore | ₹13,133 crore | +1% (Total) | 19.7% |
| Hero MotoCorp | ₹1,126 crore | ₹9,579 crore | -11% (2W) | – |
| Eicher Motors | ₹1,205 crore | ₹5,042 crore | – | 23.86% |
| TVS Motor Company | ₹778.59 crore | ₹10,081 crore | +21% (Motorcycles) | – |
Looking Ahead: Opportunities and Risks
The company is well-positioned for future growth, particularly in the EV space. Plans to enter the e-rickshaw segment in August 2025 could tap into a sizable market of 40,000 units per month. Its premium motorcycle portfolio and global expansion efforts further strengthen its outlook. Analysts project a 7% volume CAGR over FY25–28, driven by 13% export growth and a 28% Return on Equity (RoE).
However, risks remain. The rare earth magnet shortage could continue to hamper EV production, while muted domestic demand and market share erosion in the 125cc+ segment pose challenges. Geopolitical issues in the MENA region and uncertainties around a European partner’s operations also warrant caution.
Why This Matters for Investors
For investors, the company offers a compelling mix of growth potential and stability. Its consistent dividend payments and strong balance sheet make it a reliable choice for income-focused portfolios. The growing EV segment and export strength position it to capitalize on global trends toward electrification and emerging market demand. However, investors should monitor the resolution of supply chain issues and domestic market recovery for a clearer picture of long-term gains.
Let’s Talk!
What do you think about the company’s performance in Q1 FY26? Are you optimistic about its EV and export growth, or concerned about domestic sales and supply chain challenges? Drop your thoughts in the comments below, and let’s discuss where this auto giant is headed next!
- Indian automotive industry
- Two-wheeler market
- Electric vehicles India
- Motorcycle exports
- Premium motorcycles
- Dividend stocks India
- Auto sector performance
- EV production challenges
- Bajaj Auto financials
- Q1 FY26 results
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