Bajaj Auto Ltd.

' Bajaj Auto Limited Q1 FY 2027 Results Conference Call ' July 21, 2026

Currency. On the currency front, the story continued to remain distinctly favourable. The rupee depreciation provided an important and welcome cushion to manage the very sharp and significant impact of an exceptionally inflationary quarter. As I mentioned, over the last few quarters, this has been a structural advantage for the business here. Given the strength and diversity of our portfolio with exports now accounting for nearly 40 - 45% of the business. The rupee depreciated through Q1, with a realized USD-INR rate coming in at INR94.4 versus INR90.6 in the previous quarter and INR85.6 in the same quarter last year.

' Bajaj Auto Limited Q1 FY 2027 Results Conference Call ' July 21, 2026

In closing, Q1 was a volatile quarter, but was successfully navigated. The supply chain disruption should be easing off in Q2, so it should help grow the top line, and the weakness of the Indian rupee will hopefully be helpful in mitigating cost increases. But inflation and international logistics will need to be managed closely. Having said that, the demand environment, both in domestic and international, particularly in our key markets, is very positive, though the business environment may still be a bit volatile. However, putting it all together, the outlook is promising. Capacities have emerged as a key constraint to growth. So, with an eye on the future, we are undertaking an expansion of capacity by almost 25% from the current 7 million units per annum across different businesses to progressively go up to 9 million units per annum. The key areas to address will be EVs, both two-wheelers and three-wheelers, high-end motorcycles and three-wheelers.

' Bajaj Auto Limited Q1 FY 2027 Results Conference Call ' July 21, 2026

On the operational front, the turnaround continues to progress in line with the road map we had outlined internally compared to the same period last year when production had virtually come to a standstill during the restructuring process. Manufacturing has now progressively ramped up through the year and is approaching underlying retail demand. Billing performance has improved in line with this recovery. At the same time, the planned normalization of dealer and plant inventories has largely been completed, with inventory levels now stabilizing at the desired levels across the broader system. We are also seeing the benefits of tighter cost control on fixed costs and other overheads, and these improvements are now becoming evident in the financial performance. These indicators remain an important focus area as we continue to execute the turnaround in a calibrated manner.

A key change as Q1 progressed is that inflation is no longer confined to base metals; cost pressures broadened to proprietary components, electronics, electrical parts, labour, logistics and energy and conversion, all moving up simultaneously and meaningfully.

As for KTM, the focus in 2026 continues to be to drive along with the Executive Board and through them, the broad-based turnaround plan covering work streams on portfolio priorities, product development, go-to-market, supply chain, including sourcing, organizational and structure simplification with a view to rationalizing fixed costs. I expect the results of this to start showing up in the latter part of 2026 itself.

Quickly, a word on cash. We closed the year with surplus funds of over INR18,000 crores after deploying capital on multiple fronts during the year, reflecting a strong and consistent cash generation. Capex for the year was approximately INR500 crores, split equally between ICE and EV investments. We invested over INR2,300 crores between BACL and BAIH BV, the former to support the scaling of the lending book and the latter in furtherance of the KTM transaction. Free cash flow for the year was more than INR8,000 crores, a reflection of the very robust cash conversion on profit. And we returned about INR5,900 crores to shareholders Kapil Singh:

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