TVS, Bajaj Auto eye same goalpost with different approach

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India's leading two-wheeler (2W) makers Bajaj Auto and TVS Motor Co. are firing on all cylinders. Their shares gained more than 3% each on Wednesday, with Bajaj hitting a fresh 52-week high of ₹10,838.

Strong June-quarter (Q1FY27) results have prompted brokerages to raise FY27 and FY28 earnings estimates for both companies. Robust volumes and calibrated price hikes helped cushion the impact of sharp commodity cost inflation.

The drivers of growth, however, differed.

Bajaj's momentum came from exports, premium motorcycles and electric vehicles (EVs), while TVS delivered broad-based growth across scooters, motorcycles, EVs and exports. Bajaj's standalone revenue rose 37% year-on-year, but the standout was its operating margin, which held steady sequentially at 20.9% versus 20.8% in Q4FY26 despite a 4.5% commodity cost headwind. Price increases and disciplined cost control offset much of the inflationary pressure.

TVS reported standalone revenue growth of about 38%, while its operating margin of 12.8% exceeded expectations, although it softened sequentially.

Both companies remain optimistic on demand and continue to invest in capacity expansion and EVs. But they are relying on different levers to sustain earnings momentum. Bajaj is betting on exports traction and rapid product launches while TVS is focused on consistent execution across its diversified portfolio.

Bajaj's exports, accounting for about 40% of standalone revenue, hit a record 730,000 units in Q1FY27, driven by strong three-wheeler demand in Africa and motorcycle sales in Latin America. It is targeting a monthly export run rate of more than 250,000 units over the coming quarters, up from roughly 244,000 units in Q1FY27. The export focus helps, as it is yet to fix its domestic market share position.

“We reckon a recovery in domestic 2W market share from 10.7% in FY26 to 11% in FY28E, supported by new products—a new 150cc Pulsar, 10 facelifts/refreshes across the 160cc–400cc range, a new 125cc Pulsar and two all-new brands in the 125cc segment,” said a Nuvama Research report dated 21 July.

The brokerage expects Bajaj's two-wheeler volumes grow at 12% CAGR over FY26-28, driven by 8% domestic growth and 16% export growth.

According to Nuvama, TVS's domestic two-wheeler market share rose from 14.8% in FY19 to 19.5% in FY26 and could reach 20.9% by FY28, supported by a stronger presence in scooters and premium motorcycles.

The company posted record quarterly sales of 1.63 million units in Q1FY27, led primarily by domestic demand. Scooter volumes rose 36%, motorcycle sales increased 19% and EV sales surged 86%, while exports grew a healthy 33%. Management expects to outperform industry growth in FY27, with the overall two-wheeler market projected to expand at a double-digit rate.

Commodity costs remain elevated. TVS hopes product price hikes, cost optimization and higher production volumes to shield margins. Also, it expects to benefit from recent launches, including iQube’s larger battery variant, and the commercial rollout of Norton motorcycles from its Hosur plant.

On the flipside, Nirmal Bang Institutional Equities flagged capital allocation as a concern, noting that TVS has invested ₹2,000-2,500 crore in overseas subsidiaries over the past five years. Those businesses remain cumulatively loss-making, led by Norton and SEMG.

The TVS stock trades at about 34x estimated FY28 earnings, compared with 24x for Bajaj, according to Bloomberg data. The premium reflects TVS's sustained market share gains but rich valuations limit upside.

Shubham Dilawari is an equity research professional and financial journalist currently associated with Mint, where he covers markets, companies, and sector trends. He has over two years of combined experience in equity research and financial journalism, which helps him bring practical, real-world insights into his writing.<br><br>He focuses on und...