Bajaj Auto Shares Surge by 2% as ₹461.6 Crore Investment Boosts Stake in KTM

Shares of Bajaj Auto are up over 2%, hitting an intraday high of ₹8,039.65 as the market took note of the company's investment in Pierer Bajaj AG (PBAG), the parent of Austrian motorcycle company KTM. Overall, this launch highlights Bajaj Auto's desire to cement its position in the premium motorcycle market.

Strategic Investment Details

Bajaj Auto International Holdings BV (BAIH BV), the 100% owned arm of Bajaj Auto, has become an investor in PBAG through convertible bonds to the tune of 50 million euros (about ₹461.6 crore). The 500 bonds Bajaj Auto International Holdings BV (BAIH BV) subscribed to, each with a nominal value of 1,00,000 euros each, clearly demonstrate the financial backing of BAIH BV for KTM's phased resumption of motorcycle production.

BAIH BV now has a 49.9% stake in PBAG, which acts as the operating company for 74.94% stakeholder Pierer Mobility AG (PMAG). These new convertible bonds will have the option for conversion to PBAG shares from June 1, 2025 to February 29, 2028, thus aligning the strategic interests of Bajaj Auto with that of the KTM group even further.

Strengthen KTM’s Production

The investment helps revive production at KTM AG and keep its market presence intact. Bajaj Auto's MD & CEO Rajiv Bajaj holds a position on PBAG's Supervisory Board, therefore indicating that the plant's influence extended to business decisions of the KTM grouping.

Market Reaction and Stock Performance

The SENSEX was flat and the shares of Bajaj Auto were trading at ₹8,029.35, which was up by 1.97% from the previous close, at 10:06 am on Thursday, on positive news by the company. This data is the new highs experienced as investors have regained their faith in Bajaj Auto's strategic vision and unleashing the growth through adequate partnership.

While the deal is a related-party transaction, it is done on an arm’s-length basis and approved by Bajaj Auto’s audit committee, thereby adhering with the standards of corporate governance and transparency.

Long-Term Strategy

This is keeping with Bajaj Auto's long term strategy of consolidating and its association with KTM and growing its presence in the premium motorcycle segment. The deal gives Bajaj Auto a bigger financial and strategic stake in PBAG, allowing it to partake in KTM's future growth and technology. This not only improves KTM's manufacturing capacity but also makes Bajaj Auto a global player in the motorcycle manufacturing

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