Bajaj Auto Limited (BAJAJAUTO) Earnings Call Transcript

Ladies and gentlemen, good evening, and welcome to Q2 FY 2027 Results Conference Call of Bajaj Auto Limited. My name is Pawan and I will be your coordinator. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Newar, Head Investor Relations from Bajaj Auto Limited. Thank you, and over to you, sir.

Thank you, Pawan. Good evening, everyone, and festive greetings to all. Thank you, everyone, for joining for the call today. Welcome to Bajaj Auto's Q2 FY '27 Earnings Conference Call. On today's call, we have with us Mr. Rakesh Sharma, Joint Managing Director; and Mr. Dinesh Thapar, Chief Financial Officer. We will begin our call with the opening remarks from Rakesh from the business and operational performance for the quarter, followed by Dinesh, who will take us through the financial highlights. We will then open the forum for Q&A. Over to you, sir.

Thank you, Anand. Good evening, ladies and gentlemen, and welcome to the quarter 2 earnings call. Thank you very much for joining us. I'm delighted to say that the Q2 performance has fit further on the record performance of Q1. It was a festival of records in Q2, 5 of them at the corporate level, highest ever volumes, revenue, EBITDA, PAT and free cash flow. I'm sure Dinesh will delightfully dissect these for you later. The operating environment was difficult with the inflationary pressures, logistic complexities and capacity is getting challenged for high-end bikes, exports and EVs. However, some debt management ensured the record outcomes. Before we get into the view discussion, a quick word on key organizational changes at the plant. We have considerably strengthened the leadership of our international and domestic business to drive growth and ensure robust execution. The exports business has been till now led by our President. This position has been upgraded to the Chief Business Officer level and 4 new president level positions have been created to drive Africa, Asia, LatAm and advanced markets. Similarly, in the domestic operations, the motorcycle and shake-up business have been brought together into 1 new business unit, the 2-wheeler business unit. This will also be led by a CBO and the India market has been divided into 2 halves. India 1 and India 2 with each being led by a president level position. The -- in the back end as well for procurement, for operations and in R&D, similar appointments have been made. Almost all appointments are now done and the new organization is in place. Now let me get into the BU level discussion, starting with exports. The [indiscernible] crossed its highest level volume of 7.8 lakh units in Q2, a growth of 41% year-on-year. This is the second consecutive quarter above 700,000 units. We continue to grow well ahead of the industry across all the regions in Q2. In Africa, the motorcycle industry grew about 35% year-on-year while our motorcycle exports grew 83%. In Latin America, including Brazil, the industry grew about 12%, while we grew 44%. And. In Asia, which includes South Asia and ASEAN, the industry declined by about 7%, while our volumes grew 5%. In Middle East and North Africa, the industry declined about 29% and our volumes are also down 24%. So this signals a handsome gain in market share almost all around. In the largest market of Nigeria, retails were at 30,000 units AVPM level which is a very big growth over the same period last year and delivered a record market share of almost 60%. Even though this was a very handsome growth, the retails are still only at 60% level of the previous peak. The new Boxer 125 heavy-duty upgrade introduced in Africa in FY '26 -- early FY '26, continues to scale up quite smartly with exports up by 50% plus and it has been instrumental in driving the Africa growth ahead of the market. In the all-important sports segment of Latin America, which is 150 cc and above, our exports grew by 50% leading to being the #1 in the S1, which is the 150 to 250 cc segment. 3-wheeler exports did very well, too, crossing 1 lakh units in a quarter for the first time and also growing at 41% in H1. 2-wheeler exports from India grew 32% in H1 at [indiscernible] data. Volumes grew 47%, almost 1.5x the industry. Our market share in 2-wheeler exports from India has increased from 44% in FY '26 to 48% in H1. And in 3-wheelers, it has gone up from 60% to 63%, which means almost 1 in every 2 wheelers and 2 in 3-wheelers exported from India, carries the Bajaj badge. Overall, the exports business has just-shifted and sustained performance at high levels. moving up from 600,000 units per quarter levels last year to 750,000 units per quarter this year. We expect to sustain this going forward. Getting into domestic 2-wheelers First of all, I'll make a few comments on industry behavior and early effective indications. Given the sharp up and down movements caused by the announcement of the GST last year, as well as the pent-up demand. We prefer to understand the industry movement through a longer view instead of a weekly, monthly or quarterly comparison. Hence, April to August of the past, and September to December for the festive period. Since last year's base, the festive commenced on 22nd September. So therefore, we like to break the year in the halves of April to August and September to December. The 2-wheeler industry, including electric scooters, demonstrated healthy Y-o-Y growth of 18% in April to August. The 150 CC segment and the EV scooter segment grew much higher than the industry average and drove most of this growth. In the September to December period, we expect growth to continue to be in double digits, but it may not be as much as the April-August period due to the base effect. In general, the post-festive period is 1.25x the pre-festive September to December is 1.25x the April to August period. Last year, this bucked the trend and the ratio was almost 1.4% due to the GST impact. Some positive impacts of the GST still continues. And therefore, we expect the September to December period to be better than the usual 1.25x. And that's why I need to comment that we expect the September to December period also to be in double digits, but will not be 18% in the April to August period. But we have to wait and watch. In the immediate 16 days of the festive Two-wheeler registrations have grown by 10% as per the bar import. As has been the trend earlier this year, this growth is almost entirely been dipped by the 150 cc plus motorcycle segment and the EV scooters. These, in our estimates, have grown at 24% in these 16 days even by the overall 2-wheeler growth is 10%. Our comparable growth in this period of 16 days has been 32%, meaning 8 percentage points more than what the industry has grown by. We find ourselves very well positioned in both the 150 cc plus motorcycle segment and the EV scooter segment, not just with Pulsar and Chetak, but also, I would like to remind you with KTMs and Triumph. And we will leverage this portfolio for growth, profitability and competitive position. This object is being realized through a singular focus on strengthening the positive portfolio aimed at the 125cc plus segment as we have been talking about this to you earlier. Their focus is to the exclusion of the 100 cc segment, where we have made a conscious choice to protect profitability by increasing prices due to inflationary impact ahead of competition, and we are accepting the consequence of this. We certainly dampens the overall volumes of two-wheelers, but then it also has a positive influence on our margin story. Therefore, we continue to focus our product interventions in the Pulse portfolio during the quarter and even earlier. During the quarter, we launched the new Pulsar 125 and the new Pulsar 150 in the classic range and upgraded the Pulsar 160 range, featuring several industry firsts, EST displays, electronic tortebody ride modes, projector headlamps, user-friendly features like Grotech and traction control, are bringing advanced tech within the reach of a larger base of customers and are driving acceptance. The new launches commenced retail in August sometime. The share of new launches in our 125cc plus portfolio was 7% in August. It grew to 26% in September. And in the first 16 days of festive, it has further grown to 33%. These new products launched in August onwards of now 33% in this festive period. The product pipeline remains active with further refreshes and upgrade plans across the 160cc to 400cc range over the coming months in both Pulsar and Dominars. In addition, we will have 2 new brands in the pipeline, spanning the 125cc to 250cc space, getting lined up for launch in FY '27. So by the end of festive, we hope to enter January with a completely refreshed Pulsar portfolio and hopefully, the old Pulsar portfolio would have also been flushed out of the channel system. Chetak, which is also now part of the 2-wheeler business units. The industry continued to grow rapidly at 75% plus in Q2, and penetration is now, or penetration of electric scooters is now 25% of the scooter category. As we speak, Chetak achieved a milestone of 1 million scooters on the road and September was our largest month so far with retail stopping 45,000 unit levels and the Chetak 3503 becoming the highest selling model of electric 2-wheelers in India. And all this despite, as you know, of severe capacity issues, supply chain issues during, particularly during September, where instead of 60,000, we could only manage 40,000 units. Market share has moved up to 23% despite supply constraints through the quarter, which impaired a visibility by as much as 20%. Significantly, the Chetak portfolio of affordability has moved to double digits. In fact, at an overall level, our EV business, which includes 3-wheelers and Chetak is now margin accretive at the corporate level. We are expanding Chetak capacity to 80,000 per month by quarter 4, which will help us get market share and unlock new reach. Today, Chetak 550-plus exclusive stores with presence in over 850 cities through a combination of Chetak exclusive stores and the widely spread motorcycle stores. This gives us a network that has extensive reach and the capability to deliver a superior sales and service experience. Further addition of 75 exclusive Chetak stores is planned for Q3. Coming to Pro biking, which comprises the KTM and Triumph brand. The business continued its high growth trajectory with 31% year-on-year growth and delivered sales of 40,000 unit. In H1, the business unit sold 80,000 units, making it the highest ever H1 for Pro biking. KTM growth was led by the adventure and high-performance street portfolios with Adventure 350 and 250 driving the growth in their respective segments. [indiscernible] also sustained its performance of 11,000 units in the quarter despite availability being impaired by as much as 20%. 2 marquee events by KTM in Q2, the widely successful KTM Cup, '26 version and the KTM Adventure Rally Extreme led by none other than the 2018 [indiscernible]. The rollout of joint KTM showrooms have progressed swiftly, with 120 such showrooms already operational and more in the supply line. The KD stores, as we call it, now contribute to over 15% of the KTM Triumph combined volume. The adventure and high-performance street bikes are only 7% of the total motorcycle market. but they are growing 4x faster. We continue to lead category development and market share through 10 series purpose models in both brands. designed differently by terrain and rider need. This is the most by any player in this segment and positions us extremely well in this high-growth niche segment. Moving to commercial vehicles, our 3-wheeler business unit. The business delivered its highest ever quarterly volumes in Q2, achieving sales of 1.62 lakh units and growing year-on-year by 13%. The 3-wheeler category has sustained growth of 8% to 10% over the past several years with recent growth trending closer to 12%. In this expanding market, Bajaj Auto has maintained a strong leadership position in 3-wheelers commanding nearly 90% market share now in CNG passenger vehicles and over 50% market share in the cargo segment. The electric 3-wheeler market continues to grow rapidly with industry volumes expanding by more than 100%. Bajaj V-Go remains the market leader in the auto segment, with a market share of approximately 32% in September. The performance and the competitive position are a result of the strategy to segment this diverse market and deliver fit-for-purpose solutions for each segment. Consequently, the BU possesses the industry's most comprehensive product portfolio with about 20 models across ICE and EV platforms. From Ricky, the ERIC to V-Go-9018, the EV3 wheeler the longest range in the industry. While the Eric segment has declined in H1 by about 19% due to regulation enforcement and upgrading, the segment is 10 large at 35,000 units [indiscernible] 10% of this is lithium mine based and the rest is lead asset. Albeit operates in the lithium-ion space is already the market leader. Government regulation and enforcement will continue to drive this segment towards lithium and parking as the list of [indiscernible]. We are well positioned to capture this movement. [indiscernible] demand, the network is being expanded and modernized from just over 900 stores in FY '23, the network is now grown to over 1,500 stores. capacity expansion initiatives for both [indiscernible] Tech EV 2-wheelers are also underway as current demand exceeds available capacity by approximately 10%. A quick. Comment on spare. Spare business crossed the INR 2,000 crore milestone for the first time, delivering robust 15% year-on-year growth. Complementing this performance, the Bajaj Genuine oil business also achieved its highest ever quarterly volume. Finally, we remain optimistic about the near- and medium-term outlook. Already our capacities are being calenged. As I said, in high bikes and some 3-wheeler subsegments. The overall capacity of 625,000 units per annum of -- is being expanded to about 775,000 units per annum over the next 6 to 9 months in a phased manner. This is a new imperative in addition to the base sharing, which remains the same. With that, let me hand the session over to Dinesh for his update on the financial performance.

Thank you, Rakesh. Good evening, everyone, and thank you for joining us on this call. Before I begin, let me extend my festive greetings to all of you. I hope you've had a wonderful desire, and I wish each of you and your families a very happy and spurs the volume advance. Now coming to our results. We are pleased to report yet another record-breaking quarter as you would have seen in the press release that we issued earlier today. The quarter of milestones. Volumes and 15 lakh units, revenue up INR 20,000 crores. EBITDA exceeded INR 4,000 crores in profit after tax ports across another INR 3,000 crores. Each of these represents a first for the company, making this year another milestone order from Bajaj Autos Growth was broad-based across all our businesses, domestic and exports, ICE and EV teles and 3-wheelers, all contributing very meaningfully. So quite clearly, it was a quarter of milestones on multiple fronts. Now let me now touch upon the operating context before I get into the financials. On the commodities front, this last July to September quarter, continue to see hyper inflationary input cost pressures, really, with no immediate signs of these cost prices cooling off. As we had indicated in our previous call, the inflationary pressure extended well beyond the conventional mills complex to proprietary parts electrical components and conversion charges and the escalation in these categories has continued to intensify. During the quarter, costs and electric components increased in the mid-teens proprietary parts conversion charges saw double-digit increases. And within the metals complex aluminum, copper, nickel and natural rubber, also recorded a sharp sequential increases broadly in the high single digit to double-digit range. And towards the end of the quarter, as many of you may have tracked steel prices also began to firm up and is adding to the cost pressures now in quarter 3. Taken together, the impact of commodity and other input cost inflation in quarter 2 was in the whereabouts of between 3%, 3.5% range. To put this in perspective, as we outlined in the quarter 1 call, the inflationary impact in the first quarter was already about 4.5% of revenue, 4%, 4.5% is what I had signaled then. And quarter 2 has now added a further 3%, 3.5% top revenue on top of that, making the cumulative inflationary pressure over the first half exceptionally steep as you would imagine. The magnitude of this cost escalation is unprecedented, creating significant pressure on the business with inflation of a scale that we would typically see spread over many years. We have responded through calibrated pricing actions, which really have covered about between 50%, 60% of the inflationary impact over the first half. The balance was largely offset through favorable currency realization and continued cost optimization initiatives allowing us to protect margin despite the sharp escalation in input costs, which I will elaborate on as we move through the financial performance. We had initially expected what might have been expected to be a quarter, lasting a quarter or 2 has now extended into a third successive quarter. And as we look ahead, these inflationary pressures continue to persist, and I will touch upon the outlook and our response to the evolving cost environment a little bit later. Apart from material cost inflation, supply chain availability has also been quite constraining during the quarter. The supply environment has become increasingly volatile and erratic with disruptions at both the back end in terms of component availability and capacity and front end in terms of logistics and shipping challenges for our fast-growing exports business. In our electric business, supply chain and capacity constraints across both 2-wheelers and 3-wheelers restricted our ability to fully meet underlying demand with our plans being delivered only to the extent of 75% of what we had originally planned for. Having said that, the teams across both the back end and the front end have done an exceptional job of navigating these challenges, enabling us to deliver record quarterly volumes and our best ever financial performance. Coming to currency. The realization in the quarter was favorable. The rupee depreciated through quarter 2 with our realized USD INR rate coming in at INR 95.5 versus 94.4% in the previous quarter and 87.1% in the same quarter last year. This sequential and year-on-year tailwind contributed meaningfully to our realizations and profitability. Turning now to the financial performance. The momentum of the previous quarter has carried through with volumes and revenue scaling new highs. Volume crossed the 1.5 million mark for the first time, growing 20% year-on-year and marking the fourth consecutive quarter of record volumes. Revenue from operations surpassed the INR 20,000 crores milestone, a solid growth of 34% year-on-year. To put this growth in perspective, the revenue generated in the first half of FY '27 has already exceeded the full year revenue that we reported just 3 years ago in FY '23. Volumes remained the single largest driver of revenue growth. Beyond this, the revenue buildup benefited from richer mix reflecting the continued strength of commercial vehicles, premium motorcycles, exports and the steadily increasing contribution of electric vehicles. Calibrated pricing actions that I just referred to also contributed to realizations, while favorable currency movements provided the much-needed tailwind. On the domestic front, our electric business continues to scale up with combined 2-wheeler and 3-wheeler volumes nearing 200,000 units, more than doubling year-on-year and marking its largest ever quarter. The portfolio now contributes more than 1/3 of domestic revenues and over 20% of our overall enterprise revenues. Equally encouraging, as you heard from Rakesh, is the progress on profitability with continued improvement in Chpex unit economics, complementing the double-digit EBITDA margins in electric 3-wheelers, driving further improvement in the overall profitability of our electric business that continues to register double-digit EBITDA in its entirety. Exports continue to sustain their strong momentum, delivering another landmark quarter. Volumes approached 780,000 units, translating into the highest ever quarterly export revenues of nearly $800 million. The performance remained broad-based with Africa reaching new highs, while Latin America continued its sustained run of strong performances. With exports contributing around 40% of our revenues, this remains a significant engine of growth and profitability for the company. In addition, the spares business reached a new high with quarterly revenues crossing INR 2,000 crores for the very first time and continuing to provide a steady support to the overall revenue and profitability. Taken together, the strength in volumes, improved realizations, a richer business mix have enabled us to cross a significant revenue milestone even as the operating environment has remained quite challenging. Let me now move to EBITDA and margins and how we have translated the strong revenue growth into profitability amidst the hyperinflationary cost environment that I mentioned. On EBITDA, we crossed the INR 4,000 crore mark, delivering INR 4,172 crores, again, a new high for the company with a strong 37% year-on-year growth. What is particularly noteworthy here is that the profit growth outpaced the revenue growth with profit increasing by 37% year-on-year against revenue growth of 34% Sequentially, EBITDA margins held steady at 20.9% as we navigated another quarter of a challenging operating environment. Higher realizations supported by calibrated pricing action and favorable currency helped absorb a part of the cost inflation pressure. Operating leverage with a INR 20,000 crore quarter from higher revenue, alongside disciplined cost management and a hard look -- a very hard look that we did on discretionary spend helped offset the remaining cost pressures and sustained our margin. On a year-on-year basis, margins expanded 40 basis points with favorable currency realizations and really improved operating leverage being the principal drivers, more than offsetting very severe and adverse cost price dynamics. This improvement came despite an adverse mix impact from the growing contribution of the electric 2-wheeler business, which whilst getting better, still remains dilutive to the overall company. I know many of you are keen to understand the step-up in other operating income. It's a question that has been asked of in the past. And so let me address this really upfront. Now there are 3 principal contributors. The first of this is the increase in export incentives, which has come on the back of very strong growth in our export business. The second contributor is the increase in PLI incoming accruals, and there are really 3 elements to this on PLI. The continued scale-up of our electric portfolio, with the business more than doubling year-on-year has resulted in higher PLI accruals to that extent. Secondly, as some of you would be aware, we have commenced exports of our electric vehicles. And with the requisite notifications now in place, the eligibility for PLI benefit from these export vehicles is starting to reflect in our accounts. And the third element, which is probably the most significant, as you see the change over the last quarter is the rate transition under the PLI scheme which is important in understanding the quarterly movement in accruals. As you'd be aware, having crossed the cumulative revenue threshold of INR 10,000 crores under the scheme for electric vehicles, we qualify an additional 2 percentage point booster over the base rate and the base rate is 13%. So effectively, with the 2 percentage point booster, the effective starting rate for the year moved to 15%. And as eligible revenues build up through Q1, the effective rate increases further, making Q2 really an important inflection point. So we typically start the year at around 15%, which now is 13% base plus 2% booster and exit Q2 at around 18%, having reached revenues of the highest lab, and therefore, getting 16% base rate plus the 2% booster to take it to 18%. And therefore, that now represents the maximum applicable rate under the scheme that we have exited, right? So therefore, the rate for the second half is expected to remain at this maximum level, which is essentially the rate at which we have exited quarter 2, which is the 16% base rate and the 2% booster, so 18% on electric vehicle revenues for the second half. And lastly, you heard from Rakesh, Keeping with the broader growth momentum across the business. We had a very good quarter. on our Bajaj Genuine Oil business, which is what we call BGO, with higher volumes really translating increased royalty and contributing to the step-up in other operating comps. So those are really the 3 factors which have led to the step up of the other operating income, export incentives accruals, 3 factors for that and really stepped up royalty receipts for our BGO business, which has been quite buoyant. Turning to profit after tax. We recorded our best ever PAT crossing INR 3,000 crores coming in at INR 3,354 crores, up 35% year-on-year. Quickly a word on cash. Consistent with our track record of strong free cash flow generation, we generated nearly INR 4,000 crores of free cash flow during the quarter, translating into a cash conversion of 100% plus of the profit after tax. This strong conversion was supported by a combination of robust earnings and favorable working capital movements, enabling us to translate our profitability to cash while continuing to fund the business. Moving to the consolidated performance. And as I explained last quarter, the year comparison continues to be impacted by the change in consolidation following the acquisition of the control of Bajaj Mobility AG, whose financial results are now consolidated into ours, although with a 1 quarter lag. The current quarter, therefore, reflects a full quarter of its consolidated results, which was not reflected on the same basis in the corresponding period of last year. The reported growth rates, therefore, need to be viewed in this context. That said, from a headline perspective, consolidated revenue for the quarter came at INR 25,126 crores, a growth of 60% year-on-year. and consolidated profit after tax stood at INR 3,400-plus crores, also growing by 60% plus over the previous year. Alongside the impact of the expanded consolidation, the contribution from our subsidiaries now is becoming increasingly meaningful, supported by the continued scale-up of the stable expansion of our Brazilian business and the consolidation of Bajaj Mobility AG, which essentially represents the KPN business. Together, these businesses are adding greater scale and depth to our consolidated performance. Let me now spend a minute on KTM and BACL. The recovery of the KTM business is gaining traction with significant improvements in both scale and profitability. Revenue grew 65% year-on-year to EUR 701 million in the first half, while EBITDA turned positive at EUR 38 million compared with a loss of over EUR 180 million in the corresponding period of last year, of course, adjusted with the restructuring profit. This reflects the recovery motorcycle sales, a sharper focus on cost efficiencies and reduction of fixed costs. inventory levels across the KTM system and the dealer network have now returned to normalized levels. In fact, in Q2, the EBIT also returned to positive territory for the first time since the conclusion of the restructuring proceedings. These are encouraging steps in restoring the business to a more sustainable operating footing with a focus continuing on profitable growth, cost discipline and cash generation. As Bajaj Mobiliti Ag is a listed entity, is detailed financial results and other disclosures can be accessed from its website. BACL continues to scale up strongly, delivering another stellar quarter of robust growth and profitability Total income stood at nearly INR 1,200 crores, while profit after tax for the quarter came in at INR 243 crores, representing a strong growth of 85% year-on-year. To give you a sense of the scale of the business, assets under management are now nearly at INR 21,000 crores, growing more than 1.5x over the previous year. The capital adequacy ratio remained very healthy at almost 19.5%, while the business continues to operate at industry-leading returns on equity of 26% as of 30th September. Looking ahead now, on commodities, we went to the third consecutive quarter of an exceptionally challenging operating environment with input cost inflation showed no real sense or immediate signs of easing. The pressure continues to extend beyond the metals complex into proprietary parts, electrical components and converted charges. And within the metals complex, steel and copper prices, in particular, are quite firm and still as we speak and remain elevated. While the pace of cost escalation may be lower than the shop increase witnessed in the first half of the year between quarter 1 and quarter 2. The situation notwithstanding remains highly dynamic and it's very difficult to pin down. a number for the inflationary impact at this stage. So therefore, we've seen the quarter as being one-off inflation, but the magnitude of that inflation as things currently stand because of the many moving parts, it is very hard to put out at this stage. We have though taken some level of calibrated pricing earlier this month to recover 1/3 of the inflationary impact so far. Going forward, of course, we will need to carefully assess the market's ability to absorb further pricing, particularly as we navigate the third consecutive quarter of hyperinflationary pressures and continued pricing that has now been taken quite substantially over the last 2 quarters. On currency, the path of the rupee over the coming months is not wholly clear at this point of time. Recent measures announced by the RBI has helped support the rupee keeping it under [ 95 ], and only in the last few days has reached to [ 95 ] levels as a result of which realizations for us in this month of October have been below last quarter's rate of 95.5%. And if these levels were to persist, who used to know where the currency ends up in the course of this quarter. But if these levels were to persist, it would clearly be a bit of a headwind that we need to be able to manage for the current quarter, considering that the last quarter ended off at [ 95.5 ]. That said, overall, we continue to operate in a very volatile external environment as we have in the preceding 2 quarters with multiple moving parts to navigate. We will continue to manage these dynamically through calibrated pricing actions, cost optimization and other levers while remaining mindful of market competitiveness. Our focus remains finding the right balance as these factors evolve, sustaining business momentum while delivering profitability alongside [indiscernible]. With that, let me hand the call back to Anand and open the floor to questions. Thank you.

Thank you, Dinesh. Loren, with this, we can open the floor for Q&A, please. .

[Operator Instructions] Our first question comes from the line of Gunjan Prithyani with Bank of America. .

My first question is -- first of all, thank you for the comprehensive comments across businesses. It answers a lot of questions. But I think the most imp question that I have on my mind is on the domestic picture, which you did cover in the initial parts that only refreshes from Pulsar have yielded share gains. For some reason, when we look at VAHAN market share when we look at even the wholesale market share -- we are not sort of able to see that impact of new launches. So a little bit understanding of where is the disconnect, maybe we're not able to appreciate the market share improvement that we've seen on the back of Pulsar refreshes. And how should we look at those trends, both either at VAHAN or in the SIAM market share? Some color on that.

Yes, Gunjan. I can understand that there is a disconnect, which you all -- because you are looking at VAHAN, overall, you're looking at 2-wheelers, you look at which -- and you can shift out EV scooters and you can look at rest of the 2-wheelers. Now the market share story at that level gets clouded by what we call the M1, M2, which is the 100cc segment, where, like I said in the commentary, there is a significant loss of volume. And we have consciously decided to go along with that. Not that we are vacating the segment or anything, but we want to participate in it on our terms of profitability and face the consequences. And we, at some other time, will discuss the strategy on how to manage that segment. . In terms of the 125 cc segment. This is a segment where we have again lost market share. We lost market share in both about 125cc and the 150cc segment last year. And as I said last time, SP1 Because of the product fatigue, which is set in and the current portfolio was reaching the end of its life cycle. So we first started the refresh, the upgrade, the new products with -- if you remember, the end series in the 150cc plus segment. And I'll tell you the logic for that. Even though a 125cc is the larger segment. So why did we start with the 150cc plus segment. We started with the 150cc plus segment because the 150cc segment sets the tone for the 125, which is a derivative of the 150. So the brand position and the momentum gets established by the flagship products. So therefore, we first launched the 250, fully aware that it addresses only a thin slice of the market. Then the 250 was taken into the 160. And then, of course, the upgrades of the 160, which have just arrived. Then over the last 6 to 9 months, we have seen that there is traction and the market share is slowly coming back in the 150cc segment. And I told you after particularly the August launches. And this information, you will probably get after a few weeks or maybe a month or 2. The contribution of the 150cc plus segment, the new products I told you is now stands at 33% in the that space. So we are getting that traction. We are seeing the market share, getting reversed coming back to the old level and hopefully gaining ground. In the 125cc segment, where the new launches have just happened in September, we believe that the wheel will start turning through the festive and beyond because adoption of the new model takes time. And -- but sequentially, we had to go in that direction of 250, 160 and 150 at the 125. We didn't want to jump the gun and first start with the 125 because we would have lost an important method of establishing the brand. So I would say to sum it up, in the -- our fastest-growing segment -- our fastest growing products are the NS series, which is 200 and the 160 NSs within a high performance. And these H1 contributed to 20% of the portfolio. Then the N series, which contributed 40% of the portfolio. This is also growing faster than the market, not now, but in the last month. So 60% of the portfolio of the 150cc plus has been growing faster than the market and gaining share. Now in the balance, 40%, which is what we call the classic series, those introductions have happened literally September. And we will see how that pans out. Similarly, it is in the 125cc segment. the NS Series is growing much faster than the market. So the classic fees, which have been attended to only in the last month will hopefully start to provide will to reverse the trend going forward. And I can understand that this is a whole lot of stuff for you. We live with it, so we are able to sort of relate to it. And I know sitting where you are, if you are looking at that singular figure, either reported by SIAM or in the VAHAN. Unfortunately, the market is so diverse, and this company is not focusing on the whole play ground. It's just focusing on the part of the play now. And that is why -- that is what I was trying to illuminate to you.

Got it. And just to be clear, on the cc by segment that we look at in the SIAM, is there an impact of old Pulsar being run down that we're not able to see the market share improvement in terms of cc, subsegmentation and wholesale data as well -- is there a drag from the old Pulsar roll down at the moment? .

Absolutely. The whole reason for refreshing the old pulses was because the market share was stagnating, it's not eroding story. So now the new classic Pulsar have been launched, -- see the pulses 3 components high-performance component, which I said is the NS Series, which is growing faster than the market. And it is, like I said, 20% plus. Then there is the middle segment within the 160cc segment, which is growing faster than the market, it's 40% of the portfolio. Now the balances is the tactics which is was the track, and I would say still a drag because there is still channel stock. The channel stocks are just getting flushed out. We are hoping that it gets pushed out during the season. So it will still be a drag until the time not just in production and dispatch. But in the channel, the entire Pulsar changes take. How do have you had this whole change we could have managed in a previous quarter? So that when we entered, we would have entered with absolutely new also even in the channel. So we've got another quarter, we got big quarter in the South coming up in quarter 4. So that's what it is you're absolutely right, you hit the nail. So the drag was the classic and the 100 cc. 100cc we are not doing much about at this point of time. And the Classics will slowly get replaced by the, let's say, the new Classics and over a period of time, the market share will correct.

Got it. And my second question to Dinesh. I mean on the EV business, you did mention that it has turned profitable now. Could you share what is the overall revenues from the EV business in this quarter in terms of if you can give the split up 2-wheeler and 3-wheeler? And also from a margin perspective, clearly, like you pointed out, PLI has been a big driver also, and we've seen a step-up in PLI incentives. So how do we think about the sustainability -- sustainable profit here or margins given that PLI will eventually low loss a year out? So some thoughts on how do we think about the operating income sustainability which is coming from PLI and the revenues of the EV business?

Yes. So I think the revenue of the EV business, I'll just ask Anand to pull out and provide that. But Gunjan, to your question, PLI has been a contributor to, clearly, the stepped up profitability as well in some part. It's not the only factor, but it has been a contributor. I did mention that we are now at the highest slab of what the PLI scheme does offer. And so when you look at back half of the year, at least for this year, you should assume that, that level of accrual will come through on our electric business for the back half of the year. Look, in terms of what happens once the PLI scheme is exhausted, if you go by the current print of the scheme at the end of 31st March 2028. I think we'll need to wait and see what happens to the scheme at that point of time, but keep their sites an external factor that we need to wait and see. But I think internally, there is a fair amount of work that is happening on looking at the platform costs and fundamentally, the next round of cost reductions that will have to come into place to be able to mitigate at least a substantial portion of the PLI. And I think 1 will also then have to see what happens to market pricing post PLI world across the larger competitive set. -- and see how much of that can make up for it. But I think the fact that the PLI will exhaust at a point of time in the future is known, understood and clearly work underway, at least on the cost front. Pricing was a function of what happens there. But at least on the cost front to be able to manage a part of that benefit gets taken away. So clearly, some milestones, which are in the R&D funnel on being able to deliver the next round of cost savings on electric products. In terms of electric revenues, the fact that I mentioned it was about 34% of domestic. It is about -- it's close to about INR 5,500 crores. for the first half of -- for the first half, sorry.

Our next question comes from the line of Amyn Pirani with JPMorgan.

An for the opportunity. My question is on the new platforms that you talked about, which will potentially get launched in -- and our early understanding was that, that was 2 new brands platforms were primarily for the 125cc. But did I hear it right that it is like platform for 125 to 250, if you could add some context there? .

It is quite imminent. So [indiscernible] detail. But through 2 new brands. We will address the 125 to 250 segment and some segments within that, subsegment within that, both in India and growth. So that's what I'm saying. So yes, I'm not saying that both the brand will do both the things with that timing. But together, they will address the 125 to the 250 space together and in complementary.

Okay. Okay. So basically, the way what the Pulsar is doing as 1 brand today, which spans from 125 actually to 400, you will have 2 new bands, which will either collectively or individually do that in addition to what Pulsar is doing, basically? .

You're right.

Okay. Okay. That's good to know. Secondly, on the export side, we've seen for several quarters the growth remaining quite strong and gave some context to Nigeria, Latin America, Brazil. I mean, should we expect this run rate from a volume, absolute volume or growth rate? Like how are the market because I'm guessing that now that you have crossed the previous peak that you had seen in FY '22, should we assume that these markets collectively could go down to a more normalized growth level -- or are there still pockets of outperformance, which are possible, which could keep this in a healthy double-digit zone going forward as well? .

See, I'll tell you, we are -- frankly speaking, in exports don't look at the growth rate so much. We are not driven by India is slightly different because the Indian market is growing at a certain rate and you want to beat that rate, right? But in exports, there is no singular rate of growth in the market. market, you know that if you don't grow faster than the market, you lose the market share. But internationally, how do you have a singular growth rate for the international market. It is not possible. Each of the country, in fact, country each of the regions pulls in different directions and don't depend on that. So we look at the absolute volume. And that's why I said that we have reached a level of about 750,000, and we will want to keep striking that. Now what it translates in terms of growth rate we vary because of the base effect and some time someone had an election year, someone had some economic issue, somebody -- there was a rate change in financing -- those things would very difficult to sort of enter the management actions based on growth rates. But yes, growing is striking a certain number is the first thing which we look at. But having said that, pleasant surprises or well surprises maybe to you, but not so much to us, we are planning for -- certainly, there are pockets of growth. Now you say -- we have got a very good position in Africa, Latin in all the regions. And a lot of the growth will come from expanding our market share, which has been happening. So there is no reason to feel that this will not continue to happen. Secondly, we are going to open up a new segment in our existing markets, particularly the non-Africa side, we're going to open up a new segment. That hopefully will be in your terminology of the price package. And thirdly, slightly forward the medium term in my medium term is, let's say, 2 to 3 years, we will add some more new markets. I don't want to go into the details of that, but we will certainly add -- on top of this as KTM stabilizes, KTM AG, and we work together with KTM, there's a lot of collaborative work which is going on. We expect the joint product -- the definition of end products is expanding. And hopefully, with KTM now stabilizing and becoming more ambitious about its top line. There will be a flow on to the joint products manufactured and exported from here. So the combination of market share expansion, new segment opening up and slightly more, let's say, 12 months to 18 months down the road, new country and KTM kicking in. All these 4 combined is quite optimistic about the longevity and the slow up of the exports growth.

Our next question comes from the line of Raghunandhan NL with Nuvama Research.

Congratulations on strong results and festive greetings Firstly, on the EV margins, are they accretive? What can be the approximate range of margin in 2-wheeler and 3-wheelers? .