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Two-Wheeler OEM’s report strong Q1FY27earnings & paint even stronger demand outlook for FY27

ICICIdirect Research 24 Jul 2026 DISCLAIMER

Two of the major 2W OEMs, Bajaj auto & TVS Motors Came out with their Q1FY27 earnings.
Bajaj Auto and TVS Motor delivered record quarterly performances, comfortably ahead of expectations, with broad-based growth across domestic, exports, premium motorcycles and EVs.
Commodity inflation was the key headwind during the quarter. Bajaj reported 20.9% EBITDA margins (+10 bps QoQ) despite absorbing around 4.5% commodity inflation, while TVS reported margins of 12.8% (down 30 bps QoQ) with savings realised through operating leverage, richer product mix, pricing actions, and cost efficiencies.
OEMs highlighted exports as one of the strongest structural growth opportunities. Bajaj expects exports to sustainably exceed 250,000 units per month, driven by Africa, Latin America and improving KTM exports and views exports as a multi-year growth opportunity
Bajaj is undertaking a comprehensive Pulsar portfolio refresh with multiple launches in the 125cc+ segment alongside continued growth in KTM and Triumph..
EV adoption continues to accelerate. Bajaj's EV portfolio now contributes nearly 30% of domestic revenues, with the overall EV business generating double-digit EBITDA margins and Chetak becoming EBITDA positive. TVS reported 86% YoY EV volume growth.
Capacity constraints, rather than demand, are increasingly becoming the limiting factor. Bajaj plans to expand annual capacity from 7 million to 9 million units, focusing on EVs, premium motorcycles and three-wheelers. TVS is increasing two-wheeler capacity from 6.8 million to 8.3 million units and three-wheeler capacity from 250,000 to 420,000 units.
Managements remain optimistic on domestic demand, particularly in the premium motorcycle and scooter segments. While entry-level motorcycles continue to see relatively softer demand due to weaker affordability, the 125cc+ category continues to outperform. Both companies expect festive demand, rural recovery, replacement demand, and government support measures to led to double-digit industry volume growth for FY27, while export growth will continue to outperform domestic growth.
We are positive on the Auto space with top bet in 2-W OEM space as Bajaj Auto (BUY; Target 12,550) wherein we have valued the company at 25x P/E on FY28E

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