Bajaj Pulsar is a Rs 9,000 crore brand. Even after more than two decades, Pulsar mania is still gaining strength every year. Bajaj Auto is launching six new models in H1FY25 and its biggest Pulsar NS400Z was launched recently on May 3rd. Apart from Triumph Twins and Dominar 400 giving competition to Eicher Motors in the middle-weight (400 cc) segment, Pulsar400Z will further consolidate Bajaj Auto’s position. Speaking on new upcoming Pulsar models, Rakesh Sharma, Executive Director at Bajaj Auto Ltd (BAL) said, “There are 15 models of Pulsar and they cover all the subsegments of the 125-250cc category. Beginning with the biggest Pulsar in early May, we are ensuring that we set a relentless pace and are always at the top of mind of the customer.”
Pulsar 125cc was launched in 2019 and presently has 31% market share in the 125cc segment which constitutes 50% of the motorcycle industry in India. Bajaj Auto is currently reaping the benefits of spotting the rise of the 125cc segment as BS-VI related costs increased acquisition cost in the 150cc segment. Bajaj Auto’s 75% business comes from the 125cc plus segment, while for the industry, the ratio stands at 52%. Speaking on the 125 cc segment, Dinesh Thapar, Chief Financial Officer (CFO) at BAL said, “In quarter 4, our retails grew at twice the rate of others in domestic two-wheeler market and in the 125cc plus segment, our retail grew 4x than others.”
BAL’s two-wheeler wholesale volumes too were on a strong footing as wholesale volumes grew 26% YoY in Q4FY24 compared to 22% YoY growth in Q3FY24.
Strong Volumes Growth For Chetak In Q4FY24, Two New Launches In The Pipeline
And within the two-wheeler segment, electric scooters constituted 4% of total two-wheeler wholesale volumes in Q4FY24. Electric scooter, Chetak, delivered 40,000 units, its highest quarterly numbers in March Quarter 2024. Speaking on BAL’s electric scooter, Sharma said, “Chetak market share has moved from 5% same time last year to 13% in March Quarter 2024. This is a testament to the steady progress that we’ve made over the last year on electric mobility.” The company is also increasing Chetak stores from 200 to 600 in H1FY25 increasing its depth and coverage. BAL aims to launch two new Chetaks in the electric scooter segment. According to the management, the new launches will give a larger play across the mass segment. As electric scooter volumes increase, there is a drag on operating margins as Bajaj Auto tries to make Chetak more affordable competing with market leader Ola Electric and its low pricing strategy.
BAL launched Chetak Urbane and Chetak Premium in January 2024 priced at Rs 1.15 Lakh and Rs 1.35 Lakh respectively. Chetak Premium competes with Ola S1 Pro which was available at Rs 1,47000 in January 2024. Ola S1 Pro price has been reduced and is currently priced at Rs 1,20,000. Thus, presently, Chetak is not profitable on a unit level basis mainly due to high competitive intensity in the electric scooter segment spearheaded by Ola Electric. The company is undertaking various research & development (R&D) measures to reduce Chetak’s manufacturing cost and make it more affordable. “As cost rationalization benefits start to play out over a period of time, Chetak’s unit level profitability should only get better and the big assumption is that the price point remains where it is.” Operating margins expanded 121 basis points YoY in March Quarter 2023 despite high incremental volumes of Chetak electric scooter. Bajaj Auto’s operating margins stood at 19.77% in Q4FY24.
Consolidated revenues came in at Rs 11,555 crore in Q4FY24, a rise of 29% YoY. Speaking on strong revenue growth, Sharma said, “Growth was led by the robust 24% YoY increase in volumes and further aided by a richer mix of premium motorcycles and more commercial vehicles across both domestic and export markets as well as by a larger number of higher-priced Chetaks.”
Strong Growth Opportunity For E-Autos and Upcoming CNG bike
A late entrant in the electric scooter segment, Bajaj Auto displaced Ather Energy and captured the third position in the electric scooter segment in Q3FY24. Bajaj Auto’s electric scooter was launched in 2019 and the company later moved deeper into the electric landscape, introducing its first electric three-wheeler in 2023. Bajaj Auto is the largest three wheeler player in India, though two wheelers constitute nearly 85% of its total volumes. Total wholesale volumes stood at 10,68,576 units in March Quarter 2024, a rise of 24% YoY. And three-wheeler wholesale volumes grew 13% YoY at 1,51,759 units in Q4FY24.
BAL has 78% market share in the three-wheeler segment in India. But future growth opportunities lie in e-auto and compressed natural gas (CNG) auto segments. There are large parts of Central, Eastern and Western India which restrict internal combustion engine (ICE) autos and are dominated by e-ricks. This segment forms 45% of the three-wheeler sector in India and presents strong growth prospects for e-auto as e-ricks are prone to accidents due to poor structural design and slow speed. Speaking on e-auto future growth, Sharma said, “There are no permits for ICE 3-wheelers in half of the country. And therefore, we are going to be pushing hard on e-autos and e-cargo.” He further added that, “In markets where we have spent 6 months, we find that we are reaching about 50% market share, rather quickly despite incumbents being there for a while.” According to the management, e-autos are expected to cannibalize ICE and e-ricks, but CNG autos are expected to co-exist with e-autos. While CNG autos are 10-15% more expensive than e-autos, no charging time and strong CNG infrastructure rules in favour of CNG auto segment. BAL presently has 88% market share in the CNG three-wheeler market in India. Moving further in the CNG landscape, the company is also launching the world’s first CNG bike for the mileage conscious commuter. While close peers, Eicher Motors, Hero MotoCorp and TVS Motors are focusing on electric motorcycles in the near future, Bajaj Auto has chosen the CNG path. According to the management, apart from halving the commuting expenses of the common man, the bike will have dual-fuel options both CNG and petrol on the same vehicle. “The mileage conscious customer is spread across the 100-125cc commuter segment and is well over 600,000 units per month. Over 60% of this is covered by the CNG infrastructure, hence, the opportunity is exciting.” And Bajaj Auto will continue to grow faster than the industry, quipped Sharma.
