Bajaj Auto Q1 FY27 Results (NSE: BAJAJ-AUTO)
Signal: Margin pressure
The read
Q1FY27 marks the first full quarter with KTM AG consolidated, transforming the group's scale (revenue +65% YoY) but diluting margins (OPM -220bps YoY to 20.4%). Standalone auto ops remain strong — revenue +37% YoY, OPM expanded 100bps to 23.1% on operating leverage, PAT +42%. The key inflections: (1) KTM acquisition is now fully reflected in numbers, making year-on-year comparisons misleading; (2) standalone auto margins continue to improve, validating pricing power and cost control; (3) financing subsidiary is scaling fast (revenue +85% YoY), adding diversification but also leverage risk. The buyback completed in July 2026 (₹5,633 Cr at ₹12,000/share) will boost EPS going forward but depletes cash reserves.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹21,688.83 Cr | 65.1% | 21.6% |
| EBIT | ₹4,814.75 Cr | 51.3% | |
| Net profit | ₹3,188.75 Cr | 44.3% | |
| EPS | ₹115.5 | 45.8% | |
| EBIT margin | 20.4% |
P&L walk
Consolidated revenue surged 65.1% YoY to ₹21,689 Cr, primarily on first-time full consolidation of KTM AG (via BAIHAG) effective Q4FY26; organic standalone revenue grew 37.0% YoY with volume +29.4%. Gross margin compressed (raw material % not directly comparable due to structural change from KTM consolidation). EBITDA margin fell 220bps YoY to 20.4% as employee costs jumped 167% YoY to ₹1,387 Cr (6.4% of revenue vs 4.0% a year ago) and finance costs rose 73% YoY to ₹387 Cr, reflecting costs from the acquired European operations. Depreciation increased 2.4x YoY to ₹405 Cr from KTM's asset base. PAT grew 44.3% YoY to ₹3,189 Cr, helped by a ₹1,195 Cr share of associate profit recognized in Q4FY26 not recurring. Excluding KTM consolidation, standalone PAT grew 42.3% YoY, demonstrating strong underlying profitability.
Segments
Automotive segment (including KTM consolidation) drove revenue growth, posting ₹20,800 Cr (+64.6% YoY). The Investments segment contributed ₹464 Cr profit (stable). Financing segment (Bajaj Auto Credit) revenue ₹1,112 Cr (+84.6% YoY) with PBIT ₹303 Cr (+121% YoY), reflecting rapid growth in captive financing. Standalone auto PAT of ₹2,983 Cr accounts for 93.5% of consolidated PAT, confirming the core business remains the primary earnings driver despite KTM consolidation.
Key positives
- Standalone revenue grew 37.0% YoY to ₹17,244 Cr, driven by volume growth of 29.4% and positive mix (revenue growth exceeding volume growth).
- Standalone OPM expanded 100bps YoY to 23.1% despite RM cost % rising 90bps, demonstrating operating leverage (employee cost +12.8% vs revenue +37.0%).
- Standalone PAT grew 42.3% YoY to ₹2,983 Cr, with EPS of ₹106.8 (+42.2% YoY).
- Consolidated revenue crossed ₹21,689 Cr for the first time, reflecting KTM consolidation and organic growth.
- Financing subsidiary revenue grew 84.6% YoY to ₹1,112 Cr with PBIT +121% YoY, scaling captive financing business.
Key concerns
- Consolidated OPM declined 220bps YoY to 20.4% due to KTM's lower-margin European operations and higher employee costs (+167% YoY) and finance costs (+73% YoY).
- Consolidated PAT of ₹3,189 Cr was down 8.7% QoQ as Q4FY26 included ₹1,195 Cr one-time gain from associate revaluation.
- Raw material cost as % of revenue on standalone basis increased 90bps YoY to 71.0%, indicating input cost pressure.
Research and educational content only. Not investment advice.