Bajaj Auto has once again stepped in to support its Austrian partner, KTM AG, with a ₹480 crore (€50 million) infusion, marking the fourth such investment since February 2025. This move, announced on May 15, 2025, comes as KTM races against a May 23 deadline to secure €548 million to avoid bankruptcy.
Bajaj Auto International Holdings BV (BAIH BV), a wholly owned subsidiary, subscribed to convertible bonds issued by Pierer Bajaj AG (PBAG), reinforcing Bajaj’s commitment to KTM’s restructuring. The funds aim to stabilize KTM’s operations amid financial distress caused by debt and supply-chain issues.
Strengthening a Strategic Alliance
Bajaj Auto holds a 49.9% stake in PBAG, which owns 74.94% of Pierer Mobility AG, KTM’s parent company. This latest investment, consisting of 500 bonds valued at €100,000 each, can be converted into PBAG shares between June 2025 and February 2028.
The repeated financial support—totaling €200 million this year—has sparked speculation about Bajaj increasing its stake in KTM. While Rajiv Bajaj has emphasized KTM’s profitability for Bajaj Auto, he remains focused on finding a sustainable solution for the Austrian brand’s challenges, hinting at deeper collaboration.
KTM’s Financial Struggles and Recovery Efforts
KTM AG declared bankruptcy in November 2024, grappling with inflated inventory and halted production in Austria. Bajaj’s earlier investments, including a €50 million loan in February and two €50 million bond subscriptions in March and April, helped restart production at KTM’s Mattighofen plant on March 17.
Despite these efforts, KTM needs €800 million to meet its cash quota and ramp up production. Bajaj’s latest ₹480 crore infusion, approved by its Audit Committee, supports KTM’s phased operational revival, though supply-chain issues persist. Notably, KTM’s India operations, co-developed with Bajaj, remain unaffected.
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Details |
Specification |
|---|---|
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Investment Amount |
₹480 crore (€50 million) |
|
Instrument |
500 convertible bonds, €100,000 each |
|
Conversion Period |
June 2025 to February 2028 |
|
Bajaj’s Stake in PBAG |
49.9% |
|
KTM’s Cash Quota Need |
€548 million by May 23, 2025 |
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Total Funds Needed |
€800 million |
Market Response and Future Prospects
Bajaj Auto’s shares rose 2.79% to ₹8,328.30 on the BSE on May 15, reflecting investor confidence in its strategic moves. The company’s robust Q3 FY25 performance, with an 8% rise in consolidated net profit to ₹2,196 crore, underscores its financial strength to support KTM.
Posts on X highlight mixed sentiments, with some praising Bajaj’s loyalty to KTM, while others question the risks of repeated investments. Rumors of BMW eyeing KTM add intrigue, but Bajaj’s focus remains on leveraging its manufacturing prowess in the mid-capacity segment (500cc and below) to bolster KTM’s global presence.
What Lies Ahead
The ₹480 crore infusion is a pivotal step in KTM’s restructuring, but the road to stability remains challenging. Bajaj Auto’s continued support not only aids KTM’s survival but also strengthens its foothold in the premium motorcycle market.
As KTM navigates its financial woes, Bajaj’s investments could pave the way for a majority stake or a redefined partnership. With its expertise in producing models like the KTM 200 Duke and 390 Adventure in India, Bajaj is well-positioned to drive KTM’s recovery, ensuring the Austrian brand’s legacy endures in a competitive global market.