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Bajaj Auto meets St, but margins slip

Thursday, 17 January 2013 - 8:43am IST | Place: Mumbai | Agency: DNA
Bajaj Auto, the second-largest motorcycle manufacturer, has reported a 3% on-year rise in December quarter net profit at Rs819 crore, that was in line with estimates.

Bajaj Auto, the second-largest motorcycle manufacturer, has reported a 3% on-year rise in December quarter net profit at Rs819 crore, that was in line with estimates.  

Despite a slowdown in the two-wheeler segment, Bajaj Auto managed to grow 7% in the domestic market compared with the industry growth of 4%. It also improved its domestic market share to 26.2% this quarter compared with 25.1% a year ago.

However, margins slipped to 20.1% in Q3 from 21% a year ago.

In six months of the launch of 125cc Discover ST, the company sold over 2 lakh units and 51,000 units of Pulsar NS, it said.

“We saw a strong growth in volumes despite slow industry sales on account of differentiated products and a brand-centric strategy,” said S Ravikumar, senior vice-president, business development, Bajaj Auto.

The company is hoping to continue with the momentum in the current quarter on the back of new launches. Bajaj Auto, recently expanded its Discover family with the new Discover 100T.

The company recorded its highest-ever sales of commercial vehicles (three-wheelers) – over 141,000 units —  during the quarter. It recorded a growth of 23% in domestic market, higher than the industry growth of 13%.

Exports, which contribute almost a third to the company’s turnover, increased in regions such as Africa and Egypt, but were subdued in South Asia.

“We will be looking at more countries for exports, which will offset the slow sales in the South Asian region. We will expand in African and Latin American regions,” said Ravikumar.

For the ongoing quarter, the company expects the two-wheeler demand to remain subdued.

It is hoping for a strong fiscal 2014 as it expects dollar realisation to add additional 3% to profit.

“We will use this additional amount in taking our plans forward and expanding in newer markets,” said Ravikumar. 

Arun Agarwal, auto analyst, Kotak Securities, said, “Bajaj Auto’s results have broadly come as per expectations. Volume growth and higher realisations led to 8.6% year-on-year revenue growth in revenues. The company launched new products over the past few months and that should aid volume growth in fiscal 2014. Margins next fiscal are expected to receive a boost from currency benefits in exports and improved product-mix. We expect the company to perform strongly.”

Rikesh Parikh, VP-markets strategy and equities, Motilal Oswal Securities said Bajaj Auto adjusted net profit of Rs820 crore was higher than estimate, led by higher Ebitda margin of 18.7%, driven by richer product mix and higher contribution from three-wheeler exports and better dollar-rupee realisation.


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