Bajaj Auto Q4 Preview: Weak domestic sales to hamper revenue, margins to contract on inferior mix

Given the recent market rally, Bajaj Auto shares have risen 11 percent in the last month.

Pune-headquartered Bajaj Auto Limited is set to release its earnings report for the fourth fiscal quarter of FY25 on May 29. Analysts expect a marginal pickup in revenue as domestic sales take a hit. Furthermore, margins are expected to be lower due to an inferior product mix and a larger share of entry-level vehicles.

According to a Moneycontrol poll of eight brokerage firms, the Dominar 400 maker is anticipated to record a 3 percent year-on-year increase in revenue, reaching Rs 11,853 crore. Net profit is projected to rise a marginal 2 percent to Rs 1,970 crore from Rs 1,936 crore in the same quarter of the previous fiscal year.

Earnings estimates from analysts polled by Moneycontrol are in a narrow range, indicating that any positive or negative surprises could trigger a sharp reaction in the stock price. Nuvama, the most optimistic brokerage, estimates a 6 percent rise in net profit. On the flipside, Axis Securities projects a 1.1 percent decline in net income for the quarter.

What factors will affect Bajaj Auto's earnings?

Weak domestic sales: While total volumes (exports + domestic) will witness a 3 percent uptick, it is estimated that domestic sales will dip 11 percent, as per BNP Paribas. As for total volumes, the company sold 11 lakh units as compared with 10.68 lakh units sold in the same quarter of the previous year.

EBITDA Contraction: The EBITDA margin is projected to contract by approximately 10 to 17 basis points year-on-year, primarily due to a weaker product mix. A higher contribution from entry-level two-wheelers and electric vehicles, which typically carry lower margins, is expected to weigh on overall profitability.

Exports provide support: The company's exports will likely witness a 19 percent increase compared to the same period last year, reflecting sustained demand in international markets. Additionally, higher realisation has helped offset weakness in domestic demand, doing its bit in the overall revenue expansion.

What look out for in the quarterly show?

Key points to watch for in the FY26 outlook include guidance on domestic and export volume expectations for the two-wheeler segment, as well as the company’s ambitions and roadmap for the electric vehicle (EV) space. Management commentary on replacement demand trends across two- and three-wheelers, the scale-up of electric three-wheelers, and the impact of EVs on segment margins will be closely tracked. Further clarity is awaited on the rural vs. urban demand outlook, volume market share targets, and margin expectations for FY26.

At about 1 pm, shares of the company were trading at Rs 8,983, higher by 0.3 percent from the last close on the NSE. Given the recent market rally, Bajaj Auto shares have risen 11 percent in the last month.

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