Thank you very much. We will now begin with the question -and-answer session. Anyone who wishes to ask a question, may press * and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.

Hi. Thanks for taking my question. If you can sort of share a little bit more perspective on what you have seen post-GST in terms of customer behavior in terms of wh ile you called out some premiumization, but it was good to know what are the behavioral changes you are seeing pre- and post-GST? Also, can you share the festive growth number in itself? How did it fare for you if you had that number handy? And a clarification of the 6%-8% growth for the remainder of the year, is this for the entire industry or is it for motorcycles?

The impact which we have immediately experienced because of the GST rate cuts we assess to be about 6%-8% swing in the industry. What we have done is we have looked at the data from the last 5-6 years. You see, during the festive, the industry moves up in any case, the growth rate itself. Even like-to-like growth rates move up about 5%-6% points. So, the industry is growing in April-August by 5%. In the festive, it starts to grow at 10%. If you take out the COVID period that is what it is. This time, the motorcycle industry has grown by about 14%. So, we think that almost 8%-9% swing was due to the GST rate cut , but it will probably not be sustained at that level. Therefore, we feel going forward, the industry should grow at 6%-8%. It declined at minus 1%. So therefore, there is a swing of 7%-8%. But the key point is not just about the quantum of growth, but I think it is the quality of growth. We have seen a very sharp preference for up - trading. Each segment, like I said, if it was a 100cc segment, people bought the most expensive 100cc. If it was a 125cc segment, it was products like our NS-125, which are over, almost a lakh of rupees, and at the top end of the pile, grew faster than our own base 125cc offerings. Similarly, in the 150cc to 160 cc segment, our top offerings with USD fork, double channel, ABS, grew faster than the base version. So, we feel that this will continue. For the whole pyramid to expand overall, we will have to see how it goes. But yes, we are very happy about the swing in the growth rate and the quality of the growth. That’s what I said. When the industry is declining, it is quite a grind to get market share. But when there is a positive environment, particularly for a company like us, which sort of leverages innovation and wants to attract customers to a better proposition, a positive trading environment is very helpful.

Got it. That is quite helpful. My second question is on the CV exports business. Clearly, it has seen an impressive growth for the last couple of quarters. Just looking to hear your thoughts on, is it opening up of new markets, is it stabilization, or there were some license issues and fidget restrictions. What is it that driving the growth? And more from the perspective of sustainably, how do we look at this category growth over the next 12-18 months?

The fantastic thing over here is that I can't pinpoint a single market or even 2 or 3 markets which suddenly swung this. Actually, we have been sensing that this will grow because there were multiple markets across which we had launched an intense developmental effort, particularly after the ban in Egypt, which used to be one of our larger markets. And those development efforts are now bringing fruition. So, I would say Philippines, Myanmar, Afghanistan, Ghana and even Mexico, to some extent Bolivia, a lot of these markets have actually combined to deliver this. And because it is so broad -based and it is not based on any particular event or any one -time order, we feel that this trend should continue. We are also ho ping for a breakthrough for our Qute business in Egypt, which you know that we have been trying to get it while the top-level approvals are through. At the operating level, at the RTO level, those approvals are just coming in. And we hope to commence and even expand our Qute quadricycle export. So, I feel that we should be able to maintain this tempo.

Thank you. Next question is from the line of Kapil Singh from Nomura. Please go ahead.

Thank you, sir. So just on the GST question, partly my question has been answered, but also wanted to understand how should we think about the pricing power going ahead in terms of discounting as well as what is the update on the ABS norms coming up? How much impact can that have on the cost as well as demand in your assessment?

I ha ve not , Kapil, understood your point about discounting. If you were asking about discounting, there are hardly any discounts. There is here and there a little bit of tactical support, which at a regional level you gave and some financing support. But I am not sure as to what you were asking for. But if you are saying that whether discounting will cease, I don't think discounting was rampant. In some segments it was, particularly in the ones which we don't participate in the 100cc and below, we don't participate in that discounting. So, I can't comment on that because it was not being done by us. But I don't see any major change over there. Let us wait for the ABS announcements. There is an importa nt meeting on the 11th with Minister Gadkari, which is when they are meeting the industry for a discussion on the pros and cons of doing the ABS introduction on all two-wheelers. So let us see what happens in that meeting and subsequently.

So how much is the impact of ABS?

It can be anywhere between Rs. 2000-Rs. 3000.

And is the industry prepared with capacity? Like, what is the situation on capacity for ABS?

It will be difficult to manage the capacity because that doesn't obviously exist. This includes all scooters, all 100 cc, all 125 cc bikes, which is a huge component. Therefore, obviously the government has taken note of this, that there will have to be a phase -wise execution. All these matters are under discussion, actually. So , I would not like to speculate because this is exactly the kind of issues which are being discussed with the Ministry of Heavy Industries.

Thanks, sir. And second, I just wanted to check on the exports. Now, we are seeing a very good trajectory, especially October saw a step up. Is this the kind of new run rate closer to 200,000 that we should expect going ahead?

I think so in the immediate term. But there will be some ups and downs, obviously, because there is a seasonality in exports also. Right now, the exports are sort of gearing up for, or have already geared up for, attacking the season in LATAM, which starts from Thanksgiving and goes on till Christmas and New Year. So, we are already in good position for that. I am hoping that we get good retails in that season, which will allow us to then replenish stock. And then Europe and all these areas go down a little bit in the first calendar quarter. So, I think it might be a seasonality, but that is why I am focusing more, I am saying, on the growth rate, because there may be a little bit of seasonality. But yes, we are now knocking on the doors of 200,000 absolutely.

That is great. And sir, finally, just on the EV revenue, what percentage of the revenues are EVs and how much is the PLI incentive we would have accrued as a percentage of revenues for the quarter?

Well, the EV revenues in Quarter 2 were 18% of domestic revenues.

Yes, so EV revenues are a little over Rs. 1,700 crores, 18%, as Rakesh just called out. Kapil, the piece on PLI accrual is now business as usual for us. We track it like any other piece. So, we have continued to accrue the way we did last year , you know what the PLI percentages is. But what I do want to use the opportunity to call out is the fact that on the electric portfolio, which is a mix of both electric two-wheelers and electric three-wheelers, in this quarter, we have hit a double-digit margin, EBITDA margin.

Sir, what has driven that?

It is coming out of a mix of a growing proportion of the electric three -wheelers plus better unit economics on the Chetak models. If I just look back in time, same time last year, on the three of our lead models on Chetak, we would have been bleeding EBITDA. A s I look at the current moment, we are nearly EBITDA neutral on all of them.

That’s great, sir. Thank you so much. That is all from my side.

Thank you. Next question is from the line of Aditya Jhawar from Investec India. Please go ahead.

Yes, thanks for the opportunity. So, a couple of questions. Number one on the new products. So last quarter, we spoke about the non -Pulsar brand. So, are there any timelines for new product launches in the ICE portfolio?

Well, we have got a few introductions starting from December in the Pulsar range. And there will be some in March and then in May. So, we have got at least 3 good model introductions in December, March, and May.

Is this other than Pulsar, Rakesh?

No, this is within Pulsar.

Yes, but you also spoke about a non-Pulsar brand in the last quarter. Any timelines for that?

Ok, Fair enough.

It is an absolutely new development. It will happen in the next fiscal, but earlier than later.

It is good to know that you are recalibrating Triumph and KTM to get the benefit of lower GST. Any timeline for new products with lower engine displacement for Triumph and KTM?

That work is going on feverish pace. And again, I don't want to just give these timelines. But I hope you understand the complexity of making a new engine. But I think you will all be surprised by how fast we can swing that through.

Yes, just one final one. On the Mexico tariff, it seems that export to Mexico is about 10 %-12% of India's overall export of two -wheelers. It seems there is an increase in tariffs that will be effective next year. Any thoughts on that, Rakesh?

Yes, Mexico is a very big market. In fact, it is the largest market in Latin America. And the tariffs have increased to 35%. But there are only two companies which will get a concessionary tariff because of the investments which have been made and approvals which are in place . And this is one Mexican company, and the second one is Bajaj Auto. So instead of 35%, our tariff will be only 5%. And because we have the ministry's approval, etc., our plan will continue with 5%, all the others will increase to 35%.

That is good to know. Perfect. Congratulations. Good set of numbers. All the best. That’s it from my side.

Thank you very much. Next question is from the line of Amyn Pirani from JP Morgan. Please go ahead.

Yes, hi. Thanks for the opportunity. My question is actually on the domestic three-wheeler business. Now, obviously last year, we were actually on a very sharp market share gaining journey, and electrification was also growing. Now, I think you addressed it partly in the opening remarks that the market share seems to be consolidating maybe because of some supply chain challenges, but electrification continues to grow at a very sharp pace. So how should we think about the growth for the industry as a whole, ICE plus EV, and your eventual market share aspirations in the overall market? And the related question is that, till when do you think the PLI benefits could continue? Because that would be a significant or a material part of the fact that you are generating these high margins in the EV three wheelers. So how should we think about EV three wheelers’ profitability over a slightly medium term?

I will take the industry and the segment and all that, and then Dinesh can talk about the PLI and all those things. So, there are three segments, ICE Auto, E-auto, and E-Rick. ICE Auto had been declining. So, April to August, the ICE Auto business sort of was declining by about 4 %-5%. Because of the GST rate cut, the payback period has improved in ICE Auto, and we have already seen some very positive uptakes about that. So, we feel that this minus 5% will become about 0%, so it will be flattish. But this is a very welcome thing for us, because our market shares are touching 80%, and products like RE CNG are highly profitable for us. So , this is a good thing. The ICE Auto goes from minus 5% to flattish, and there we have got a great position. In E-auto, it was rocking at about 75% growth. It is tempered down, because the payback in RE CNG is 13 months and in E -auto, it is 19 months. So, that way, on a level playing field where there is no restriction, actually people tend to buy RE CNG. But be that as it may, so this 75% plus is now, we think, would be around 50% growth rate. So there, as you know, we touched the pole position, but we got hobbled because of this supply chain issue and went under the number one position in Q2. But I think in Q3, we will start to get back some of the market share and closer to the number one position. This is an important market, because we continue to grow by 50% or so. And here, while everyone else has got 1 or 2 products, or mainly 1 product, 1 model, we have 2 very successful models, the small body and the wide body. And we are introducing 2 more over there, so we will have 4 in there. So, because people also ask me this question, on what basis everyone is making electric, they look the same and blah-blah, and what basis you will win. Of course, there is a qualitative thing about a company which is trusted and most of the people wait for Bajaj to introduce the electric auto. But I keep that aside. That is a softer brand side thing, but though very powerful. But I say that on the hard side, it is the segmentation which we are doing, where we are positioning a product for different use cases. We have studied the different use cases. And finally, there is the E -Rick, which is right now at about 40,000 units, but I must say, it is shrinking gradually, because partly people are trading up, or finally, because of the congestion, a lot of restrictions have been placed on their movements, particularly over flyover, this, that and the other, in many cities in Uttar Pradesh and some other big time states, because these are very big over there. And therefore, it is sort of restricted, and already the government is saying that you have to register these. And only the better ones are being registered. So, there is some element of organizing that industry which is taking place. And we have launched the E -Rick over there. It is early days, but we are very keen to sort of grab a good share of this market. Beyond this, in another 1- or 2-years’ time, we are working on some more solutions, because we see there is an intense requirement for this last mile transport. So, when you put all this together, I think it is a very lucrative and large segment, which people don't appreciate. And we have got a fantastic position to begin with in this, both in terms of brand, in terms of our technology, in terms of understanding of the market, the dealer network, and success. So, we are very optimistic, both from a corporate performance, financial performance and BU performance point of view.

On your question on the PLI, look, I think the PLI is still valid till March of 2018. So fundamentally, we have still got, let us say, about 3 years. To your question, when it gets phased out, what happens? The intention very clearly is to start building organic margin. That will start to replace the PLI benefit over time. If I go by the experience of Chetak, it typically takes a couple of years for R&D effort to start finding its way into market. And I think there is already a work stream that is well underway on rationalizing cost structures, like I said, to build back organic margin for electric three -wheelers. So hopefully, by the time PLI gets phased out in March of 2028, the benefits of that work stream will start to play out. And then, of course, it is also something to watch out for us to what happens at the end of the PLI, because clearly the sharp pricing that is operating in the market, of some of these incentives, we will need to see how market pricing settles at that point of time, when the incentives are taken away. But we are doing our bit to ensure that we start to build margin on the back of very strong cost rationalization programs.

I will clarify one point. I just want to drive this important point clearly. So, the structure of the industry is like 40,000 ICE Auto, 20,000 E-Auto and 40,000 E-Rick. And net-net this is the way it is. Now, 40,000 are not going to go anywhere, the CNG and the ICE ones. Because it is economically better today. The payback in a CNG Auto is far better than an E -Auto. It is very different in two -wheelers, because of CNG and familiarity of the product, which is where we got 80% market share. So, there might be slight erosion, like 40,000 may become over the years 35,000. Now, this 20,000 is growing at a breakneck speed, and that is growing by getting first - time users because there is sheer demand in the industry. So that certainly is g rowing on that basis, plus an upgrade from the E-Rick. Now, here, we were like a number 1, number 2 position, but we will be leveraging all those things which I told you about. And then, of course, there is the other balance 40 ,000, which might become 35 ,000 in the future, or 30 ,000. But there als o, with the launch of Riki, we have got a play. So, you can see, right from Riki to the Maxima, and everything in between, we straddled the entire industry quite effectively.

Thanks a lot. That is good to know. And look forward to the new solutions that you were also referring to. Thank you.

Thank you. Next question is from the line of Raghunandan NL from Nuvama Research. Please go ahead.

Thank you, sir, for the opportunity. Congratulations on strong numbers. Firstly, on KTM, can you speak on the way forward for India and Austria businesses? Can you talk of steps for turnaround in Austria business and also synergy opportunities with the India business? That was the first question. Second, on Bajaj Auto Credit, what is the investment so far after the Rs. 500 crores investment you spoke about, and further investment expected in FY '26 and ‘27? That’s it from my side. Thanks.

So, Raghu, on the KTM Austria business, you will have to take a pause for a bit because technically, we are still awaiting that last regulatory approval. And having waited this long, we would rather wait for a few more days, move to change of control and then really start to talk externally about it as we get fully involved. So let us give it some time. But it is fair to assume that as we get involved once the change of control happens over the next couple of weeks, we will then put in place a full-fledged program for the operational turnaround that straddles pretty much the front end and the back end including rationalization. So, a lot of our internal thinking is done, of course, but let us wait for regulatory approvals that are a few days out and then start to comment on it. And we will do that. You need to be mindful of the fact that the future Bajaj Mobility AG is a listed entity. So, we just have to be mindful of listing obligations even in Vienna and Switzerland. So, we will come back to it at some point in time to talk about it. On BACL, our current cumulative investment is Rs. 2,900 crores. Of this Rs. 2,900 crores, we have infused about Rs. 500 crores in this financial year. In terms of how we see it going out, I think, for the most part, the business is now getting to a stage where it will start to fund itself. Maybe the last couple of Rs. 100 crores, between Rs. 200-Rs. 300 crores is what it will need from here onwards to get to a path of being able to sustain its own future growth. At the moment, it is currently operating at a debt-equity ratio of about 4-4.5. And then the profits that it will start to deliver should start to take care of the growth priorities and the churn of the AUM portfolio.

Got it, sir. Thanks for that. And what would be the total financing ratio as of now and the share of BACL?

Just give me a second. So, the financing penetration is not very different. It is close to about 70% for motorcycles. And BACL penetration in the total financing, is about 40%. On three-wheelers, in any case the penetration has been very stable at between 90 %-95%. It hovers in that range and BACL penetration is about 50%.

Thank you, sir.

Thank you. Next question is from the line of Yash Agrawal from Nirmal Bang. Please go ahead.

Congratulations, sir, for a great set of results. My first question is on the EV demand. Like post- GST, there is a 10% cut in the ICE two-wheelers. So, would it hamper the EV penetration going forward?

There was such an onrush during the season that we did see the EV demand tapering down. The EV demand , let us say, for two-wheelers became in single -digit growth, much below what happened in motorcycles. But that is because there was a big surge in favor of the conventional and the GST cuts, etc. We think that the demand might get tapered by a few percentage points. But the proposition is intact. When people are buying, they are buying more to solve the operating expense problem in two-wheelers. And it is 30 paise to Rs. 3. So, it is like one-tenth of what an ICE scooter delivers. So, we feel that this will very soon, in 1 or 2 months, get back to the growth rate. The growth rates were at about 20%. We feel that maybe 15% -20% range it will get back. Because even when EV two-wheelers were priced at 1,50,000, people were shifting to them. And people were shifting to them to solve their monthly fuel expense problem. And they will continue to shift to EV to solve the same problem.

Thank you, sir. Very helpful. And on the CNG motorcycle demand, how is the response as of now?

The response, of course, has been much lower than the initial phase. We feel that it is going to be a long curve to market development. There are 2-3 things which are there. One is the quantum of savings, which sometimes gets impaired by the under filling of gas in the CNG tank because of pressure reasons, even though the CNG network may be available, but sometimes because the gas is not fully filled, it compromises the range. And in any case, the first adopters are people who are heavy-duty users because they tend to save more. And for them, range is very important. And when that range gets compromised, they switch the CNG to petrol. And then, of course, the savings get impaired. But of course, the government is making a lot of efforts in ensuring the fuel pipelines are such that the pressure quality is maintained. And second, of course, is that the penetration of the CNG network has to improve, which again it is continuously doing. And those are the 2 issues which we have encountered, which after the initial burst of adoption has slowed down. But we feel that it will be a slow and steady improvement. And we are focusing on those geographies which have not just the number of CNG pumps, but the density. So now , we understand the market a little bit more. So, there may be a state which may be having more CNG Pumps like Bihar than West Bengal, but pump density in Bihar per 1,000 is far lower than West Bengal. So West Bengal becomes a better target. It is an illustration I am telling you. We have adapted our go-to-market for that.

Very helpful. And the last question is on the electric motorcycle. Do you have any near -term plans for introducing a product in motorcycle as well, the EV ve rsion? And how do you see it similar to the response to two-wheeler scooters and three-wheelers, do electric motorcycles have a penetration possibility in near-term?

See, there are some use cases, both in the entry -level and high-end sporting things in India and globally. But these are very difficult to predict. But we are in this game. So, we are very clear that we must have options which serve these use cases. And of course, nobody can say for certainty that it will be a bull’s eye or whatever. But I think there is a greater loss from missing out an opportunity than investing in something and that opportunity doesn't realize. So therefore, we have a very vigorous R&D effort going on for development of electric motorcycles.

That is all from my side. Thank you.

Thank you, Nirav, and thank you everyone for joining the call.

Thank you very much. On behalf of Bajaj Auto Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you. This transcript has been edited for readability and does not purport to be a verbatim record of the proceedings.