Bajaj Auto Reports Strong FY26 Financials, Cites Caution on Future Demand

Bajaj Auto Warns of Softening Demand for Two-Wheelers in India

Bajaj Auto Ltd, the country's fourth-largest two-wheeler maker by volume, has warned that demand for two-wheelers in India is likely to soften due to rising raw material costs driven by the West Asia conflict. The company reported strong earnings growth and unveiled its largest share buyback, but executives said that more than a third of the gains from recent GST cuts have been wiped off due to price hikes.

The company's executive director, Rakesh Sharma, said that the GST rate cut had uncorked demand, but with bike prices increasing, part of that reduction has got reversed. This will obviously have an effect on the demand environment. Bajaj Auto reported a 23% year-on-year growth in consolidated revenue to ₹62,905 crore in FY26, driven by an over 10% growth in overall volumes to more than 5 million units.

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In the fourth quarter, profits jumped a sharp 103% to ₹3,492 crore on the back of a one-time recognition of profit share at its acquired parent firm of KTM. Revenues in the quarter climbed 41% to ₹17,832 crore. However, operating margins in the quarter shrank from 19% in the year-ago period to 17% in Q4 FY26, owing to rising commodity costs partly offset by price hikes.

The company's management flagged fuel price hikes as a key risk to demand, noting that supply disruptions from the West Asia conflict could weigh on consumer sentiment. However, Sharma said that the same trend could accelerate EV adoption, as people anticipate price increases and want to be free of fuel bills. According to Sharma, EV two-wheelers and three-wheelers together contribute about 20% to Bajaj Auto's domestic revenue.

Bajaj Auto declared its results after market hours on Wednesday, with its shares closing 3.4% higher compared to a 2.4% gain in the Nifty Auto index. The company also announced a ₹5,633-crore share buyback proposal, representing 1.68% of total equity shares. After the results were announced, the company informed the exchanges that Sharma has been elevated to joint managing director, reporting to managing director Rajiv Bajaj.