'No pause button for Pulsar', Rajiv Bajaj says market share in segment near 42%

He also highlighted Chetak's prospects of hitting 15,000 units per month this quarter, alongside a steady flow in domestic three-wheeler sales and exports. The electric scooter has surpassed 10,000 monthly sales,

Bajaj estimates a sharp rise in the company's market share in 125cc segment to about 32%. In the Pulsar segment, which is 150-250cc, the market share is likely closer to 42%, and in the 125-cc plus, where he believes that the company may now be in a leadership position in the domestic market, the share would be closer to 35%.

A: Although, I must say that 2023 was treating us so well that we have reluctantly crossed into 2024. Yes, we were supposed to notify the exchanges today that we will be doing a buyback and the board will meet on Monday at 4:30 pm to decide upon the details. I heard you say there was a lot of back and forth the last time and I want to say that that is not entirely true, because we only had a second meeting to finalise the details the last time. Hopefully, we don't have to do that this time.

The rationale quite frankly is that, as I said, we have been having an outstanding year, you have seen the results for the first half, you have seen hopefully, what we have clocked in the third quarter in terms of sales from different verticals, a new record or 1.2 million vehicles sold in quarter three. So, I can't elaborate too much because we have results later this month, but obviously we have had a record quarter. And at the same time, we have over time re-engineered our business such that despite the fact that we keep investing in new technologies, products and markets, as you have seen with the Pulsar, KTM, Triumph, Chetak, electric three-wheeler, Brazil, etc.

But, like was the case on March 31 last year, we will again end up at close to ₹20,000 crore of cash this year and I don't think it's smart to sit on all that money. So, one to give it away as dividend or one can do it a little more efficiently, let's say through a buyback. So, I think it's a no brainer.

A: Yeah, I am really having to hold myself back from talking about it because I am not supposed to talk about it till the board meets to decide on that. But yes, I can say that it would be logical that since this year, is turning out to be much better than the previous and even better than what we expect expected at the start of the year. So certainly, that would point towards a most significant buyback that we did the last time. But again, that is something the board has to decide on Monday.

A: As my father would always say, he was very happy to keep the cash under his pillow every night. He said he slept very well on that basis. But more seriously, we are obviously investing strongly in the business. If I may elaborate, you have seen the entire Pulsar lineup being refreshed and the impact in the market base. Rakesh (Rakesh Sharma, ED, Bajaj Auto) spoke with you (CNBC-TV18) on January 1, 2024, to say that in all probability we have rested the number one position in the 125 cc plus segment other than the 100 cc motorcycle segment as far as domestic sales are concerned, and I think he is still awaiting the last bit of industry information on that, but we are in number one position there in all probability.

We have invested in a new plant for KTM in Chakan (Pune), which is onstream now. So, we have needed to invest in that. The Chetak has moved up very smartly to over 10,000 vehicles a month. So, there is a lot of investment in that, in technology and in facilities. The electric three-wheeler we launched in May last year. We are close to leadership in this quarter as far as e-autos are concerned and while the export business is still flattish around 140,000 a month, but we are investing in markets, most importantly, Brazil. So, we are doing what we need to do for the business. But yes, it's a very profitable business at 20% EBITDA (earnings before interest, tax, depreciation, and amortisation) as you have seen in Q1 and Q2, the exchange rate is very favourable. So that explains the excess cash.

A: Well, that is obviously a very important reason and for whatever salutary effect that may have in terms of earnings per share, etc. Obviously, no single buyback like the individual rung of a ladder gets to anywhere, but if you do it progressively over 5-10 years then you find yourself in a different position at the end of that process. So, I would like to believe that the board would conclude that doing this is better, more efficient in the short-term and in the long-term then just a plain dividend.

A: Let me go in reverse order there. I think our capacity is around 500,000 to 550,000 vehicles a month. The reason I say approximately is because it depends on the mix, the blend. I just said that we had a record quarter of 1.2 million vehicles sold in Q3. Of course, that is the peak quarter because of the festive season. But I would like to believe from what I know of our product plans and sales and marketing plans for this quarter that we can repeat the festive quarters in Q4 as well. So, I would like to think that sales every month will start with a four and I can tell you the break-up roughly, I am hopeful that the domestic motorcycle business between Bajaj KTM and Triumph should be close to 200,000 motorcycles driven primarily by the Pulsar.

I heard you say earlier that the market rally has pressed the pause button. But remember, there is no pause button on a Pulsar. So, Pulsar will keep going, we have many launches planned for this quarter under that brand. I am hopeful that Chetak will cross over into 15,000 territory per month in this quarter. I am hopeful we will maintain the momentum on our domestic three-wheeler sales at around 40,000 a month and I think exports will still remain stable at about 140,000 plus-minus a month. So, I think all of that could add up to about 400,000 a month; January may be a little weaker, March may be a little stronger as we head into marriage season. So that is one.

To respond to your previous questions, it is best that I share with you that we have done in the past. One, typically our capex every year is only about ₹1,000 crore. Our PAT is now looking like it's going to be more in the region of ₹7,000-8,000 crore. So, obviously, we are generating far more than we need to invest. And finally, our dividend policy, which is a public document, clearly states that whenever we have in excess of ₹15,000 crore sitting on our books, we would like to give away anything more than 70% of that through a combination of dividend, buyback, etc. And last year we did, I think we gave away more than 100%. So, I think we are going to just simply stay true to that dividend policy.

A: Because you haven’t talked to me in a long time.

A: The reason Rakesh didn't share that because we still don't know the data of one major competitor, but from what we know, and then we hazard a guess about that one company. Our estimate is that our 125-cc segment market share has moved up very sharply to about 32%. In the Pulsar segment, which is 150-250, we are probably closer to 42% and in the 125-cc plus, where we believe that we may now be in a leadership position in the domestic market, we would probably be about 35%. Now that maybe 34 or 36, depending on what we get exactly by the end of the day or tomorrow morning.