Bajaj Auto posts strong FY26, warns of demand slowdown ahead
Despite reporting strong earnings growth and announcing its biggest share buyback, Bajaj Auto Ltd has warned that demand for two-wheelers in India is likely to soften as rising raw material costs driven by conflict in West Asia push up vehicle prices and erode gains from recent GST cuts.
Bajaj Auto’s managing director Rakesh Sharma said in the post-earnings media conference on Wednesday that more than a third of the gains from GST have already been wiped out due to price hikes by companies.
“The GST rate cut has really outpaced demand and now with bike prices rising, some of that decline has reversed and so it will obviously have an impact on the demand environment,” said Sharma.
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Bajaj Auto expects high single-digit volume growth for the Indian two-wheeler market in FY27. This outlook is impacted by rising vehicle prices due to rising raw material costs, which partially offset gains from recent GST cuts.
Rising raw material costs, partly due to conflict in West Asia, have led to increases in vehicle prices, eroding some of the demand growth resulting from GST cuts. This also resulted in operating margins narrowing in Q26 despite overall revenue and profit growth.
Bajaj Auto sees potential for acceleration in the adoption of electric vehicles due to rising fuel prices. Electric vehicles and three-wheelers currently contribute around 20% to its domestic revenues, and its electric vehicle portfolios, including the Chetak brand, remain profitable.
Bajaj Auto reported consolidated revenue of ₹62,905 crore for FY26, up 23% year-on-year, and consolidated net profit of ₹9,212 crore, up 7% year-on-year. The company also announced share buyback of ₹ 5,633 crore.
Bajaj Auto warns that demand will slow down as rising raw material costs push up vehicle prices. This increase reverses some of the positive impact of the recent GST cuts, which had previously stimulated demand.
fourth largest in the country The two-wheeler maker reported 23% year-on-year (YoY) growth in consolidated revenue. ₹62,905 crore in FY26, driven by over 10% growth in overall volumes, including domestic and international sales of two-wheelers and commercial vehicles (CVs), to reach over 5 million units. Within this, exports increased by 21% to 2.25 million units, and domestic sales increased by 3% to 2.86 million units.
While the two-wheeler industry has grown 11% in India to reach 21.7 million units in FY26, according to data from the Automobile Association of India (Siam), FY27 is likely to see high single-digit volume growth, according to both Bajaj Auto and Hero MotoCorp, the country’s largest two-wheeler maker by volume, which announced its results on Tuesday.
Consolidated net profit Bajaj Auto grew by 7% ₹9,212 crore in FY26 and operating profit margins increased from 19% to 21%.
The company also made a statement ₹5,633 crore share buyback offer representing 1.68% of total equity shares.
But profits rose sharply by 103% in the fourth quarter. ₹3,492 crore following recognition of one-time dividend in its acquired parent company KTM. Revenues increased 41 percent this quarter ₹17,832 crore.
However, operating margins in the quarter declined to 17% in Q4 FY26 from 19% in the prior year, due to increased commodity costs partially offset by price increases.
The company’s management flagged increases in fuel prices as a significant risk to demand and stated that supply disruptions resulting from conflicts in West Asia could put pressure on consumer sentiment.
However, Sharma said the same trend could accelerate further. EV adoption. “People are expecting price increases (on gasoline and diesel). They want to get rid of that because fuel bills are a major component of homeowners’ budgets and that’s pushing them to adopt electric vehicles, and I think that’s going to continue,” he said.
According to Sharma, electric two-wheelers and three-wheelers together contribute around 20% to Bajaj Auto’s domestic revenue and the overall EV portfolio remains profitable. Notably, Bajaj has a two-wheeler electric vehicle series under the Chetak brand, and its three-wheeler series includes Bajaj Riki and WeGo.
Bajaj Auto announced its results after market hours on Wednesday. Its shares closed 3.4% higher compared to a 2.4% rise in the Nifty Auto index.
After the results were announced, the company notified the stock exchanges that Sharma had been promoted to joint managing director. Reports to the general manager Rajiv Bajaj.
Bajaj announced its earnings a day after Hero MotoCorp. Hero’s revenue increased by 16% ₹47,411 crore, while its profits closed the year with a 35 percent increase. ₹5,832 crore.
