🔍 Observations
Topline
- Consolidated revenue surged 23% YoY to ₹62,905 Cr in FY26 (vs ₹50,995 Cr), with Q4 FY26 alone jumping 41% YoY to ₹17,832 Cr — the strongest quarterly print of the year.
- Export volumes drove outsized momentum: CV exports grew 49% YoY and two-wheeler exports 18%, pushing total export volumes to 22.5 lakh units in FY26.
- BACL (financing subsidiary) tripled income to ₹3,248 Cr; its AUM near-doubled to ₹18,835 Cr, making it a material and fast-growing contributor to consolidated topline.
Bottomline
- Consolidated PAT attributable to owners jumped 47% YoY to ₹10,744 Cr in FY26; Q4 FY26 PAT of ₹3,662 Cr was up 103% YoY — substantially aided by KTM associate profit reversal of ₹1,195 Cr vs a ₹335 Cr loss in Q4 FY25.
- Standalone PAT (before exceptionals) grew a cleaner 18% YoY to ₹9,833 Cr, reflecting core automotive profitability without associate noise.
- Tax efficiency improved: effective tax rate fell to ~24.2% in FY26 (Total Tax ₹3,377 Cr / PBT ₹13,952 Cr) vs ~28.4% in FY25, aided by deferred tax credits.
Margins
- Standalone EBITDA margin expanded 30 bps YoY to 20.5% for FY26 and held firm at 20.8% in Q4 FY26 — disciplined cost management despite a ₹6,567 Cr jump in raw material costs.
- Finance costs on a consolidated basis more than tripled YoY to ₹1,169 Cr (vs ₹389 Cr), reflecting BACL’s borrowing scale-up; ex-financial services, the increase is a more contained ₹260 Cr vs ₹68 Cr.
- Other expenses rose 49% YoY to ₹5,113 Cr — faster than revenue growth of 23% — flagging cost inflation in distribution and overheads worth monitoring.
Growth Trajectory
- Total volumes grew 10% YoY to 51.2 lakh units; revenue per unit economics improved sharply, with standalone revenue up 17% on just 10% volume growth — mix upgrade and pricing discipline at work.
- BACL’s PAT surged from ₹58 Cr to ₹665 Cr in one year, contributing meaningfully to consolidated profit growth beyond the core automotive business.
- Q4 FY26 sequential revenue growth of 10% (₹16,204 Cr → ₹17,832 Cr) confirms momentum is building, not plateauing.
🧮 Profit & Loss Statement
🧮 Balance Sheet
🧮 Cash Flows Statement
🟢 Green Flags
- 47% consolidated PAT growth demonstrates operating leverage and multi-engine profit generation across automotive, investments, and financing segments.
- EBITDA margin at 20.5% for FY26 — stable and expanding despite input cost inflation; signals strong pricing power and product mix discipline.
- Export CV volumes up 49% YoY — deepening penetration in high-margin international markets reduces domestic cyclicality risk.
- BACL AUM doubled to ₹18,835 Cr with ROE of 23% and Net NPA of ~1.0% — a high-quality, fast-scaling captive finance arm that enhances the ecosystem.
- Other equity grew from ₹34,909 Cr to ₹38,552 Cr while paying out ₹5,855 Cr in dividends — earnings power far exceeds capital consumption.
- Q4 FY26 Automotive segment profit up 88% YoY (₹3,838 Cr vs ₹2,041 Cr) — core business acceleration, not just associate or treasury gains.
- Capital Adequacy Ratio at 19.5% for BACL — well above regulatory minimums, providing headroom for continued AUM scaling without equity dilution.
🔴 Red Flags
- Total debt surged: Non-current borrowings more than doubled to ₹15,339 Cr and current borrowings to ₹6,642 Cr — largely BACL-driven, but consolidated leverage has structurally changed.
- Inventories tripled YoY to ₹6,294 Cr (vs ₹2,077 Cr) — a sharp build that could reflect either acquisition impact or channel loading; needs clarity from management.
- Operating CFO of ₹2,597 Cr is thin relative to PAT of ₹10,574 Cr; the gap is primarily explained by a ₹10,371 Cr increase in loans (BACL disbursements), but cash conversion quality requires ongoing tracking.
- Finance costs up 3x YoY to ₹1,169 Cr — as BACL scales, any credit quality deterioration or NPA migration would compress consolidated margins rapidly.
- Other expenses growing faster than revenue (49% vs 23%) — if structural rather than investment-phase, it signals operating leverage is beginning to erode.
- OCI swung to -₹1,362 Cr in FY26 (vs +₹1,315 Cr in FY25), driven by fair value losses on strategic investments; Total Comprehensive Income of ₹9,213 Cr trails PAT of ₹10,574 Cr.
- Associate investment in KTM collapsed from ₹3,688 Cr to ₹169 Cr — the ₹1,195 Cr Q4 associate profit should be viewed cautiously until KTM’s financial recovery is independently confirmed.
📊 Balance Sheet Analysis
- Asset base expanded 42% YoY to ₹77,223 Cr, primarily driven by BACL consolidation — intangibles jumped from ₹40 Cr to ₹4,185 Cr and loan book grew from ₹9,916 Cr to ₹18,824 Cr (current + non-current).
- Equity base is solid at ₹40,220 Cr with no meaningful goodwill impairment risk on core automotive assets; however, NCI of ₹1,388 Cr is a new structural entry post-BACL consolidation.
- Current ratio stands at approximately 1.76x (Current Assets ₹33,977 Cr / Current Liabilities ₹19,338 Cr) — adequate liquidity despite BACL’s short-term funding mix.
- Deferred tax liabilities of ₹1,304 Cr represent a latent cash outflow; partially offset by DTA of ₹309 Cr, but net liability position warrants monitoring.
💰 Cash Flow Analysis
- Operating CFO of ₹2,597 Cr vs ₹(1,406) Cr prior year — a dramatic reversal, but still suppressed by ₹10,371 Cr working capital absorption, predominantly BACL loan originations.
- Investing outflow of ₹(7,034) Cr reflects ₹7,703 Cr in new loans disbursed and ₹560 Cr in capex, partially offset by ₹355 Cr of net cash acquired via business combination.
- Financing inflows of ₹5,079 Cr mask aggressive borrowing activity — gross borrowings of ₹25,720 Cr raised against ₹14,575 Cr repaid; net debt build of ~₹11,145 Cr funds BACL growth.
- Free cash flow (Operating CFO ₹2,597 Cr minus capex ₹560 Cr) = ₹2,037 Cr — modest relative to earnings scale, but reflective of a business transitioning toward a financing-heavy model.
💡 Investment Outlook
Bajaj Auto delivered a structurally stronger FY26 — core automotive margins held firm, export momentum accelerated, and BACL emerged as a credible high-ROE growth engine within the ecosystem.
The 47% consolidated PAT growth flatters due to associate profit reversals and BACL consolidation, so investors should anchor to standalone’s cleaner 18% PAT growth as the underlying earnings trend.
Balance sheet leverage has risen materially and warrants a disciplined watch on BACL’s credit quality as AUM scales.
The risk-reward remains favorable for long-term holders, contingent on BACL NPA trajectories and sustained export volume momentum.
Disclaimer: This post features ChartAlert-AI-generated financial content which may contain inaccuracies or errors. This commentary is strictly for informational purposes and does not constitute a recommendation to buy or sell any security. Investors are responsible for performing their own due diligence; always consult with a licensed financial advisor before making investment decisions.
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