Bajaj Auto Ltd warned that demand for two-wheelers in India is likely to soften as rising raw material costs, driven by the West Asia conflict, push up vehicle prices and erode gains from recent GST cuts, even as it reported strong earnings growth and unveiled its largest share buyback.
Bajaj Auto’s executive director Rakesh Sharma said on Wednesday in a post-earnings media conference that more than a third of GST’s gain has already been wiped off owing to price hikes from companies.
“GST rate cut really uncorked demand and now, with bike prices increasing, part of that reduction has got reversed and, therefore, it will obviously have an effect on the demand environment,” Sharma said.
The country’s fourth-largest maker (by volume) reported 23% year-on-year (y-o-y) growth in consolidated revenue to ₹62,905 crore in FY26, on the back of an over 10% growth in overall volumes—including domestic and export sales of two-wheelers and commercial vehicles (CVs)—to more than 5 million units. Within this, exports grew 21% to 2.25 million units, and domestic sales grew 3% to 2.86 million units.
While the two-wheeler industry grew 11% in India to 21.7 million units in FY26, according to data from Society of Indian Automobile Association (Siam), FY27 would likely see high single-digit volume growth, according to both Bajaj Auto and Hero MotoCorp, the country’s top two-wheeler maker by volume that announced its results on Tuesday.
Consolidated net profit for grew 7% to ₹9,212 crore in FY26, and operating profit margins expanded from 19% to 21%.
The company also announced a ₹5,633-crore share buyback proposal, representing 1.68% of total equity shares.
In the fourth quarter, though, 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 the same trend could accelerate adoption. “People are anticipating price increases (of petrol and diesel). They want to be free of this because fuel bills are an important component in a householder’s budget, and that is driving them towards adoption of electric vehicles, and I think that will continue,” he said.
According to Sharma, EV two-wheelers and three-wheelers together contribute about 20% to Bajaj Auto’s domestic revenue, and the overall EV portfolio continues to be profitable. Notably, Bajaj has an EV two-wheeler lineup in the Chetak brand, and its three-wheeler line-up includes Bajaj Riki and WeGo.
Bajaj Auto declared its results after market hours on Wednesday. Its shares closed 3.4% higher, compared with a 2.4% gain in the Nifty Auto index.
After the results were announced, the company informed the exchanges that Sharma has been elevated to joint managing director. He reports to managing director .
Bajaj declared its earnings a day after Hero MotoCorp. Hero saw its revenue jump 16% to ₹47,411 crore while its profits gained 35% to close the year at ₹5,832 crore.