Financials

Financials — Bajaj Mobility AG

Does this company have the financial quality, balance-sheet strength, cash generation and valuation support to justify how the market prices it?

Read FY2024 and FY2025 with both eyes open. FY2024 carries the full weight of KTM AG's self-administered insolvency: a €1.18 bn EBIT loss, equity wiped through zero, and free cash flow of minus €777 m. FY2025 then reports a €590 m net profit — almost entirely a one-off restructuring gain from the creditor haircut and from Bajaj Auto's capital injection, on revenue that collapsed 46 % as production restarted. Neither year is a fair window on the business. The pre-crisis cycle (FY2016–FY2022) and the first clean post-insolvency quarter (Q1 2026) are the windows that matter.

1. Financials in one page

Bajaj Mobility AG (formerly PIERER Mobility AG) is a €1–2 bn premium motorcycle OEM — KTM, Husqvarna, GasGas — that earned 9–10 % EBIT margins and ~17–21 % ROE through FY2022, then ran the inventory cycle straight off the road. Revenue peaked at €2.66 bn in FY2023 while operating cash flow had already turned negative; working capital ballooned to €531 m, net debt jumped to €776 m, and within twelve months KTM AG was in court-supervised restructuring. The reorganisation wiped €1.08 bn of equity, then a Bajaj-led recapitalisation and a 30 % creditor cash-out at €0.30-on-the-euro restored book equity to €385 m and put €550 m of fresh five-year bank debt on the balance sheet at EURIBOR plus a low-to-mid single-digit margin. Q1 2026 revenue grew 70 % year on year to €331 m and EBITDA returned to the black at €5.5 m, but the bottom line is still a €35 m quarterly loss. The one metric that matters now is operating EBITDA margin on rebuilt revenue — can the business get back above ~10 % at a €1.5 bn run-rate, or has the premium-motorcycle franchise been permanently re-rated lower.

2. Revenue, margins, and earnings power

The motorcycle franchise compounded revenue at 8.1 % per year from 2016 to 2022, with EBITDA margins anchored between 14 % and 16 % and EBIT margins between 7 % and 10 %. That is a credible premium-OEM profile: high enough to fund product cycles, low enough to remind you it is still a cyclical consumer-discretionary business. The crack opened in FY2023 — revenue rose to a record €2.66 bn, but EBITDA margin dropped 340 basis points to 12.2 % and net income fell more than half. The combination of European dealer over-stocking, the Husqvarna E-Bicycles failure, and rising input/financing costs hollowed the bottom line a full year before the insolvency made the headlines.

The half-year and quarterly cadence shows the inflection more clearly than the calendar year. H1 2024 revenue was already down 27 % year on year before insolvency was filed in November; H2 2024 collapsed to €872 m as production was cut and dealers stopped ordering. H1 2025 looks gigantic on the P&L only because the creditor write-down (€1.16 bn implied gain) booked in that half. The honest comparison is Q1 2026 — the first quarter under Bajaj control — at €331 m of revenue and €5.5 m of EBITDA. That run-rate equals roughly €1.3 bn of annual revenue, about half of FY2023's peak.

The pre-crisis story was high-quality growth at credible margins. The current story is whether normal seasonal volume — KTM historically sold 330,000–380,000 motorcycles a year — comes back, and whether the rebuilt cost base can earn an EBITDA margin you can underwrite.

3. Cash flow and earnings quality

Free cash flow is the cash a business throws off after the operating outlays and capital expenditures it must make to stay in business. For most of the last decade, Bajaj Mobility's FCF converted poorly: capex of €140–280 m per year ate most of operating cash flow, leaving FCF between minus €17 m and plus €172 m. The five-year average through FY2022 was around €60 m on revenue averaging €1.7 bn — a 3–4 % FCF margin that always looked too thin for a premium-margin OEM. The cash and the earnings never reconciled cleanly, and that is the forensic signal in hindsight: reported net income of €171 m in FY2022 sat alongside FCF of minus €3 m.

The pre-FY2023 picture was already telling: FY2018, FY2021 and FY2022 each saw reported profit while FCF was flat, negative, or barely positive. Then FY2023 made the gap impossible to miss — net income of €76 m against FCF of minus €413 m, with working capital expanding by €344 m (to €531 m). Net debt jumped from €257 m to €776 m in twelve months. That working-capital build (mostly KTM-branded motorcycles sitting unsold at European dealers) is what tipped the parent into the November 2024 insolvency filing.

4. Balance sheet and financial resilience

Through FY2022 the balance sheet looked durable: equity of €914 m, net debt of €257 m, gearing under 30 %. By the end of FY2024 it had inverted entirely — equity at minus €194 m, net debt at €1.64 bn, gearing mathematically undefined. The FY2025 close shows the restructuring effect: equity recapitalised to €385 m (a Bajaj capital injection plus the creditor-haircut gain) and net debt cut to €798 m by paying €0.30 on the euro to creditors and writing off the rest. The Feb 2026 refinancing — a €550 m, five-year, unsecured loan from a JP Morgan / HSBC / DBS / MUFG consortium at EURIBOR plus a low-to-mid single-digit margin — replaced an emergency €450 m bridge from Bajaj Auto and extended the maturity wall.

Working capital is the second resilience story. Through FY2021 it stayed below €275 m; in FY2023 it almost doubled to €531 m as European dealer channels clogged with KTM 1290 and Husqvarna Norden inventory. Even after the FY2025 reset working capital is still €343 m, materially above any pre-2023 level. The franchise has not yet shown it can grow back without rebuilding the same inventory pile, and the new five-year covenants make a repeat much more visible to creditors.

Resilience metric	FY2022 (pre-crisis)	FY2024 (insolvency)	FY2025 (post-recap)	Read
Total equity (€M)	914	−194	385	Restored but ~60 % below peak
Net debt (€M)	257	1,643	798	Still ~3× pre-crisis
Equity ratio	35.8 %	−8.1 %	24.3 %	Below 30 % comfort line
Working capital (€M)	187	525	343	Inventory still elevated
Gearing (ND÷Eq)	0.28×	n/m (neg eq)	2.07×	Highly leveraged

5. Returns, reinvestment, and capital allocation

In the pre-crisis cycle this was a credibly above-cost-of-capital business. ROE averaged 17.4 % over FY2016–FY2022 and ROCE 13.0 % over FY2016–FY2020, with FY2018 the strongest year (ROE 21.2 %, ROIC 13.6 %). FY2023 was the warning: ROE fell to 8.3 % even with the inventory build still on the books. FY2024 and FY2025 return ratios are not meaningful — equity went through zero and the FY2025 earnings include a non-cash restructuring gain that would distort any ROE calculation.

Capital allocation tells a sharper story. Capex stayed at €140–180 m a year through FY2021 (about 10 % of revenue) — high for an OEM, justified by the racing-heritage product cycle. It then jumped to €268 m and €284 m in FY2022–FY2023, a step-up the cash flow couldn't fund. With CFO already negative in FY2023, that capex went straight onto the debt stack. The company also paid a small dividend through FY2022 (€0.40–€0.50 a share) that was suspended once the insolvency hit. FY2025 capex was cut 69 % to €73 m — survival mode, not steady-state.

Under Bajaj Auto's control the capital-allocation question is more straightforward than for most public companies: with 74.9 % of shares held by Pierer Bajaj AG, the parent's priorities (using Mattighofen for premium-street, Chakan for emerging-market 125–390cc, Triumph contract manufacturing) drive reinvestment. Public minority shareholders own a 25 % residual stake in whatever earnings power the rebuilt business eventually delivers.

6. Segment and unit economics

Bajaj Mobility no longer breaks segments out cleanly — the bicycle businesses (Husqvarna E-Bicycles, KTM Fahrrad, Felt, R Raymon) were divested in 2024–25, the MV Agusta minority stake was sold, and X-BOW (sportscar) was spun off. What is left is a near-pure motorcycle OEM with three brands (KTM, Husqvarna, GasGas) and the WP suspension/components arm. Per-unit economics therefore reduce to motorcycles sold × average selling price × gross margin.

Volume tells the story the P&L cannot: peak sales of 372,511 motorcycles in FY2023 collapsed 44 % to 209,704 in FY2025, and Austrian production halved from 222,041 to 146,934 in FY2024 alone. The Mattighofen plant is the high-cost (and high-margin) end of the franchise. Whether Austrian volume recovers to 200,000+ is a direct read on whether premium street and adventure demand has truly returned. Bajaj's Chakan plant (India) continues to manufacture 125–390cc KTM/Husqvarna for emerging markets and feeds back into the consolidated unit count.

Implied per-unit revenue ranged from €5,660 (FY2020) to €7,140 (FY2023) and was €4,810 in FY2025 — a sharp 33 % drop reflecting both negative inventory destocking and a less premium mix during the restart. A return to ~€7,000 per unit with ~330,000 units annually would translate roughly to FY2022 revenue (€2.3 bn). Anything materially below that and the rebuilt franchise is structurally smaller.

7. Valuation and market expectations

At €19.18 a share (18 May 2026) Bajaj Mobility trades roughly 19 % off its 52-week high (€23.70) and 68 % above the 52-week low (€11.42). On ~36.9 m shares the market cap is about €708 m; with net debt of €798 m, enterprise value is ~€1.5 bn. Conventional multiples do not work here for two reasons: FY2025 earnings include a restructuring gain (P/E and EV/EBITDA on reported figures are misleadingly cheap), and Q1 2026 annualised earnings are still negative. The cleanest reads are price-to-book and EV/revenue normalised against pre-crisis output.

A simple bear/base/bull frame on a normalised free-cash-flow view, given Bajaj Auto's 74.9 % control:

Scenario	What it assumes	Implied equity range
Bear	Permanent capacity cut. Steady-state ~250k units, ~€1.4 bn revenue, 6 % EBITDA, sub-zero FCF after capex.	€8–12 / share
Base	Production recovers to 300–330k units, ~€2.0 bn revenue, ~10 % EBITDA, ~3–4 % FCF margin by FY2027.	€18–24 / share
Bull	Bajaj synergies + emerging-market push restore FY2023 volume at FY2022 margins. EBITDA above €350 m.	€28–35 / share

At €19.18 the market is pricing the base case — recovery, but not redemption. The premium-multiple peers (Eicher, Bajaj Auto) trade at P/B of 7–9× and EV/EBITDA of 19–25×, more than four times Bajaj Mobility AG's normalised multiples; that gap reflects both the restructuring discount and the structurally lower volume-and-margin profile of a European producer competing against Indian volume manufacturers that own the small-displacement end of the wallet.

8. Peer financial comparison

The peer set is the listed premium-motorcycle universe plus the parent. Honda and Harley-Davidson trade at trough multiples for different reasons (Honda is auto-dominated; Harley is in volume decline); Bajaj Auto and Eicher trade at growth multiples because Indian two-wheeler demand still compounds. Piaggio is the closest European structural comp — Italy-based, Aprilia/Moto Guzzi premium brands, listed on Borsa Italiana.

Three observations. First, P/B of 1.84× sits between Honda (0.40×) and Piaggio (1.50×) on the low end and Bajaj Auto (7.46×) and Eicher (9.07×) on the high end — exactly where a balance-sheet-distressed European OEM with an Indian parent should sit. Second, Bajaj Auto and Eicher earn structurally higher EBITDA margins (~19–24 %) than European motorcycle producers (~11–13 % at best); a controlling parent does not change the cost base in Mattighofen. Third, Piaggio's EV/EBITDA of 1.75× and Harley's 5.78× are the comparable benchmarks for a Bajaj Mobility recovery — at €381 m of normalised EBITDA the €1.5 bn EV translates to about 3.9×, between the two. The valuation is consistent with a wounded European OEM, not with a structural compounder.

9. What to watch in the financials

The financials confirm a pre-crisis franchise of credible quality — 14–16 % EBITDA margins, 17–21 % ROE, an asset-light premium-OEM model — that broke under inventory and balance-sheet stress in FY2023 and was restructured in FY2024–25. They rule out any reading of the FY2025 EPS of €17.60 or the €590 m net profit as recurring earnings power; both are restructuring artefacts. The €550 m five-year refinancing in February 2026 buys time, but the operating quality is unproven until the post-insolvency cost base demonstrates margin recovery on rebuilt volume. The first financial metric to watch is operating EBITDA margin in H1 2026 — above 8 % validates the recovery; below 5 % implies the rebuilt franchise is structurally smaller and lower-margin than the one that broke.