Bajaj Auto kicks off KTM turnround as premium push, global sales spur growth

New Delhi: With premium motorcycles and the overseas markets powering its growth, Bajaj Auto Ltd has now started work to turn around Austrian motorcycle maker KTM, its largest-ever acquisition. These growth drivers give the Pune-based two-wheeler major the financial muscle as well as strategic push to revive the iconic brand.

The company, India's fourth largest two-wheeler manufacturer by sales, posted a 25% year-on-year rise in consolidated net profit to ₹2,749 crore in the December quarter, helped by a stronger product mix, as customers upgraded to higher-end models after cuts in the goods and services tax (GST). Revenue rose 23% to ₹16,640 crore.

Executive director Rakesh Sharma said KTM's revival plan hinges on three key components—bringing in a new management, providing liquidity to the company’s business and cutting costs.

“We have a new CEO (chief executive officer), a new CFO (chief financial officer), a new CIO (chief information officer), and very soon a new CSO (chief strategy officer) joining by 1st April—so the top management deck is in position. These are the folks who are going to lead KTM back to where it was earlier,” Sharma said on Friday during a post-earnings media call.

“We had noticed several opportunities for cost-reduction in various areas and overheads in operations and manufacturing, sourcing, etc." Sharma added. "Multiple work streams have been launched between Bajaj Auto and KTM; so Bajaj Auto is giving very, very strong support for reduction of cost, as also for capturing certain synergies between the two companies.”

The top executive said the year 2026 will be important for KTM's turnaround, as a lot of clarity has come in since Bajaj announced acquisition of full stake in KTM in May last year.

As per the deal announced, Bajaj agreed to infuse €600 million into the company through debt funding, while €200 million has already been invested since FY24, taking the total to €800 million ( ₹7,778 crore). Bajaj’s partnership with KTM's parent Pierer Mobility AG took off in 2007, when it first picked up a stake in the firm.

International business is key for Bajaj as its export growth is outpacing domestic market sales. According to company’s disclosures, domestic two-wheeler sales in October-December grew 2% to 601,208 units, while exports grew 14% to 531,175 units.

Sharma said consumers' shift to premium products is a big tailwind for the company. “It is the quality of growth, with the upper segments outperforming the lower segments, which plays very well for us because our portfolio pivots on the proposition of trying to persuade customers to upgrade through higher displacements and more differentiated products, features, etc.,” he said.

Mint's review of Society of Indian Automobile Manufacturers (Siam) data shows Bajaj Auto's premium motorcycles, with an engine capacity of over 150cc, saw a 96% surge in domestic sales to 150,748 units during the December quarter.

“This tailwind was captured by all the business units, resulting in delivering the peak performance,” Sharma added.

Industry optimism

Going forward, the company believes the momentum of growth seen after the GST cuts of September will hinge on inflation and regulations. The top executive said near-term prospects appear positive, but the price rise due to inflation and regulation tweaks will be a key factor to watch in the coming months.

The country’s third largest two-wheeler maker TVS Motor Co. management had also said on Wednesday that it expects durable demand in the coming quarters. “We have grown ahead of the industry, and we are very confident that this momentum will continue both on the industry side, and we will likely to do better than the industry growth in Q4,” K.N. Radhakrishnan, director and chief executive at TVS had said in an earnings call on 28 January.

According to data from Siam, two-wheelers recorded their highest-ever December quarter sales of 5.7 million units, growing 17%, as festivals and GST cuts boosted demand.

TVS Motor posted a 46% year-on-year jump in net profit in the December quarter to ₹891 crore, while its revenue grew 33% to ₹14,745 crore.

Hero MotoCorp, India's largest two-wheeler manufacturer, will release its results on 5 February.