Expected IRR In USD

Figures converted from EUR at historical FX rates — see data/company.json.fx_rates. Ratios, margins, and multiples are unitless and unchanged. Spot anchor 2026-05-19 uses EUR/USD 1.1648; FY2025 close items use 1.175; Q1 2026 items use 1.1498.

Expected IRR — USD, Three-Year Horizon

1. Headline

The probability-weighted three-year IRR on owning Bajaj Mobility AG (PKTM / BMAG) equity at the $22.34 spot is negative low-single-digits in the central post-dilution case — operating recovery is real but is offset on a weighted basis by the bear-case downside and the partial-dilution drag from the $1.06 B conditional convertible authority running to 2030. Strip the dilution overlay (assume the parent does not draw any of the authorised authority) and the expected IRR moves to roughly flat, still below the cost of equity for a balance-sheet-distressed European OEM. Bull-only IRR is +16% p.a.; bear-only IRR is −20% p.a.; the asymmetry that the tape is pricing through a 41% six-month rally does not survive a scenario-weighted reading anchored to the verdict tab's conclusion ("Avoid until the AGM and H1 2026 print").

IRR formula used throughout: IRR = (Exit_per_share / Spot)^(1 / T) − 1, with T = 3 years (May 2026 → May 2029). No interim dividend is assumed — the company suspended the dividend in 2024 and has given no indication of resumption. Total return is price-only. The 3-year horizon is chosen because it spans the four highest-resolution catalysts (June 2026 AGM, August 2026 H1 print, January 2027 FY26 preliminary, August 2027 H1 2027) plus a clean FY2027 reporting window — long enough for the operating recovery to either land or fail. An 18-month view is reported as a secondary cross-check.

2. Spot Setup

The market cap → per-share check: $824 M ÷ 36.9 M ≈ $22.33, ≈ $22.34 within rounding. The book-equity cross-check: $452 M × 1.84 ÷ $22.34 ≈ 37.2 M shares (within 1% of the implied 36.9 M used here). The Bull, Bear and Verdict tabs all use 36.9 M shares for valuation walks; this tab uses the same anchor.

3. Scenario Bridge — Revenue → EBITDA → EV → Equity → Per Share

Each scenario is built from the source tabs (long-term-thesis-USD §2, business-USD segment table, competition-USD peer multiples, forensics-USD clean numbers, numbers-USD scenario table). Capex/D&A 0.58x in FY2025 is held as the net-debt trajectory governor through the horizon (debt deleveraging in bull and base, debt creep in bear).

The bull bridge produces $59.73/share on a pure 8.0x × 13 % build — well above the $35 target adopted by the bull tab. The bull tab is more conservative (7.5x × 12 % at FY2027) and that conservatism is retained as the adopted bull exit price ($35) so the IRR is anchored to a defensible specialist underwriting rather than the high end of the bridge. The base post-dilution per-share ($22.27) and the bear ($11.65) are taken straight from the bridge / bear tab.

4. IRR by Scenario and Horizon

The 3-year column is the workhorse — it aligns with the two H1 prints and two FY preliminaries inside the next 36 months that resolve the operating-leverage thesis. The 18-month column shows what happens if you compress the recovery (mathematically larger annualised IRR in each direction because the price target is held fixed and the horizon is shorter). The 5-year column is included only to show how the bull narrative thins as the time horizon extends — even at a $35 exit, the annualised return decays to single digits over five years.

5. Probability Weighting

The weights below sum to 1.00 and are defended by named, dated catalysts from the catalysts-USD tab. None exceeds 50 % because variant-USD's variant strength 72 / evidence 78 explicitly does not support concentration on a single scenario.

Expected IRR = 0.25 × 16.1 % + 0.45 × (−0.1 %) + 0.30 × (−19.5 %) ≈ −1.9 % p.a. over 3 years in USD, on $22.34 spot.

6. Dilution Adjustment — The $1.06 B Conditional Convertible Drag

The 27 January 2025 EGM authorised up to 16.9 M new shares (50 % of count) and $1,058 M of convertibles until 27 January 2030, with preemption excluded on cash issues up to 10 % of capital. The same weights are re-applied to a pre-dilution path (parent retires or ring-fences the authority) and a post-dilution path (partial draws at recovered prices in base; deeper draw at depressed prices in bear). The bull scenario assumes no draw under either path.

Pre-dilution: 0.25 × 16.1 % + 0.45 × 3.1 % + 0.30 × (−14.6 %) ≈ 0.9 %. Post-dilution: −1.9 %. The drag of roughly 2.7 percentage points per year is the conditional-capital authority's expected cost to a minority holder over the horizon — that is the IRR you forfeit even before the operating outcome is decided. The drag is asymmetric: it bites only in the base and bear, never in the bull (where the parent has neither need nor incentive to draw at a depressed price).

7. Sensitivity — Exit EBITDA Margin × Exit EV/EBITDA (Base Case)

Holds base-case exit revenue at $2.4 B, exit net debt at $700 M, and post-dilution share count at 40.6 M. Reads off the per-share fair value (USD) at each margin/multiple intersection.

The base-case anchor cell (10 % EBITDA margin, 6x EV/EBITDA) sits between 5x (−16.2 %) and 7x (+4.9 %) and resolves the central tension neatly: the equity needs both a 10 % EBITDA margin and a Harley-like 6–7x exit multiple to break even at the 3-year mark. Compress either to a Piaggio-band 3.5x or to a 6–8 % margin, and the IRR collapses to negative territory regardless of operating execution. Conversely, the cross-over to a 15 %+ IRR requires either a clean Eicher-band 9x re-rate (which the long-term-thesis-USD tab labels "the only mechanism that justifies a structural multiple re-rate") or 12 %+ EBITDA on a 7x multiple. Cells set to −100 % indicate equity wipe-out: EV at that intersection is below the net-debt mark.

8. Cross-Checks

9. What Would Change the Answer

Three dated, observable signals would shift the expected IRR by a material margin in the next twelve months.

10. Material Limitations