Bajaj Auto margin slips again as costs outpace 65% revenue growth
Consolidated operating margin fell 3.75 percentage points YoY; the stock's initial -1.13% reaction was followed by a +4.52% gain the next day.
Filed 21 Jul 2026, 12:43 IST · BAJAJ-AUTO (BAJAJ-AUTO)
Key takeaways
- Consolidated revenue grew +65.14% YoY, but expenses rose faster at +73.52%, cutting operating margin by 3.75 percentage points.
- Net profit rose +44.26% YoY, while other income contributed 15.54% of pre-tax profit and the tax rate increased by 2.55 percentage points.
- The stock fell -1.13% on results day before gaining +4.52% the next session, against a 2.71% median absolute move after its eight recent results.
Price around the results
Revenue growth did not translate into operating leverage
Bajaj Auto's consolidated revenue increased +65.14% YoY, but expense growth was faster at +73.52%, reducing operating margin by 3.75 percentage points. Sequentially, revenue rose +21.63% while expenses increased +22.66%, narrowing margin by 0.66 percentage points. The gap between sales and cost growth was therefore visible both YoY and QoQ.
Margin pressure is now a two-quarter trend
Operating margin has declined for two consecutive quarters, from 27.19% in Q3FY26 to 23.16% in Q4FY26 and 22.50% in Q1FY27. It remained 6.36 percentage points above the 16.14% median among 22 Consumer Discretionary peers that had reported. Profit quality was mixed: other income equalled 15.54% of pre-tax profit, while the tax rate rose 2.55 percentage points YoY and interest expense increased +73.11%.
Higher operating profit did not prevent a sequential earnings decline
QoQ net profit fell -8.69% even as operating profit increased +18.20%. Depreciation rose +40.11%, interest increased +12.48%, and tax expense climbed +46.31%; the tax rate also moved up by 1.02 percentage points. YoY net profit still grew +44.26%, but more slowly than revenue.
The initial market response was ordinary, but the next move was larger
The stock declined -1.13% on the results day and gained +4.52% in the following session. The initial fall was smaller than its 2.71% median absolute move after recent results, while the next-day gain was larger. Across eight recent result reactions, the stock fell after five and rose after three.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹21,689 cr | ₹17,832 cr | +21.63% | +65.14% |
| Other income | ₹688 cr | ₹661 cr | +4.00% | +35.14% |
| Expenses | ₹16,808 cr | ₹13,703 cr | +22.66% | +73.52% |
| Operating profit | ₹4,881 cr | ₹4,129 cr | +18.20% | +41.60% |
| Operating margin (%) | 22.50% | 23.16% | — | — |
| Interest | ₹387 cr | ₹344 cr | +12.48% | +73.11% |
| Depreciation | ₹405 cr | ₹289 cr | +40.11% | +244.51% |
| Profit before tax | ₹4,427 cr | ₹3,141 cr | +40.94% | +49.52% |
| Tax | ₹1,235 cr | ₹844 cr | +46.31% | +64.58% |
| Net profit | ₹3,189 cr | ₹3,492 cr | -8.69% | +44.26% |
| EPS (₹) | ₹115.50 | ₹131.10 | -11.90% | +45.83% |
Operating margin of 22.50% compares with a Consumer Discretionary sector median of 16.14% across 22 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.13% | -0.92% |
| Next session | +4.52% | — |
Volume on the results session was 1.95× its 20-day average.
What to watch
- Whether operating margin stabilises above 22.50% after two consecutive quarterly declines.
- Whether expenses grow slower than revenue after +73.52% YoY versus +65.14% revenue growth.
- The next quarter's share of pre-tax profit from other income compared with 15.54%.