Currency Tailwinds: How Rupee Depreciation Shielded Bajaj Auto's Margins

Market snapshot: Bajaj Auto has demonstrated exceptional resilience in its Q3 FY26 performance, navigating a complex environment of commodity inflation through strategic currency hedging and a robust export footprint. Chief Financial Officer Dinesh Thapar highlighted that the rapid depreciation of the Indian Rupee (INR) against the US Dollar (USD) acted as a vital natural hedge. For the quarter ended December 31, 2025, the company achieved a record consolidated revenue of ₹16,204 crore, marking a 23% year-on-year increase. Despite a 50 basis point impact from rising input costs, the company's EBITDA margins expanded to 20.8%, underscoring the efficiency of its export-led business model.

Summary: Bajaj Auto's CFO confirmed that the depreciating Rupee, with dollar realizations reaching ₹88.3, successfully offset the pressures of commodity inflation. The company reported record-breaking quarterly revenues and a 25% surge in consolidated net profit, driven by a revival in exports and a growing electric vehicle portfolio.

Key Takeaways

• Natural Export Hedge: Dollar realization rose to ₹88.3 in Q3 FY26 from ₹84.3 YoY, mitigating a 50bps commodity cost spike.
• Export Milestone: Overseas volumes crossed 600,000 units for the first time in 15 quarters, reflecting recovery in Africa and Asia.
• EV Momentum: The electric vehicle segment, led by Chetak, now contributes 25% to domestic revenues and has reached profitability.
• Margin Stability: EBITDA margins improved to 20.8% (up 30bps QoQ) despite price absorption in the high-growth EV segment.

SAHI Perspective

From a SAHI perspective, Bajaj Auto is a textbook case of leveraging geographic diversification as a financial shield. By maintaining a high export-to-domestic ratio, the company effectively converts global currency volatility into a margin buffer. While domestic competitors struggle with pure input cost pressures, Bajaj’s 'natural hedge' allows it to absorb inflation without aggressive price hikes that might dampen demand. However, investors should monitor the sustainability of this currency benefit if the RBI intervenes to stabilize the Rupee or if global commodity prices (specifically aluminum and copper) accelerate further.

Closing Insight

Bajaj Auto’s ability to turn a macro headwind like currency depreciation into a strategic advantage distinguishes it in the 2W space. As long as export momentum remains above the 600k unit threshold, the company remains well-positioned to sustain its record-high revenue trajectory.

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