Bajaj Auto — EV Upside, Shareholder Value?

Bajaj Auto has turned electrification into a real earnings engine, with EVs contributing around 20–25% of domestic revenue and the company allocating roughly 60% of FY26 capex to the EV business, which helped lift EV revenue to several thousand crores. This shift has supported record quarterly revenues (examples: ~₹14,922–15,220 crore in recent quarters) and expanded EBITDA margins above 20%, with PAT rising by high-teens to low-twenties percent year‑on‑year in recent reports. For shareholders the positives are clear: accelerating EV sales are improving margins (EVs nearing EBITDA breakeven or already profitable in segments), freeing strong free cash flow (multi-thousand crore FCF in FY26 running periods) and leaving a large surplus cash cushion that funds buybacks, dividends, and targeted investments like KTM and Riki. Management’s 7-point strategic focus (premium 125cc+ bikes, exports, EV scale-up, KTM turnaround, spares, profitable growth, capital allocation) underlines a diversified growth runway rather than a one‑trick EV bet. Risks remain and matter to shareholders: EV component supply (rare‑earth magnets) and commodity/currency swings can pressure margins; turning around KTM requires execution and capital; aggressive capex into EVs could compress near-term ROCE if volumes or pricing falter. Also, higher EV share shifts product mix and may reduce cyclical downside but creates execution risk in scaling Riki and commercial EVs profitably. Net impact: Bajaj’s EV push appears beneficial overall for shareholders — it is already revenue‑accretive, margin positive in parts, and supported by strong cash generation — provided management sustains margin discipline, mitigates supply risks, and executes KTM/Riki turnarounds without overleveraging the balance sheet.