Bajaj Auto, the country’s third largest two-wheeler manufacturer, posted a two per cent rise in net profit for the June quarter, beating Street estimates. It was helped by higher domestic volumes and lower taxes.
The Pune-based firm recorded Rs 978 crore standalone net profit for the quarter, against Rs 957 crore for the corresponding quarter a year ago. A Bloomberg poll of analysts expected the net profit to be Rs 955 crore. The firm said it posted an Ebitda (earnings before interest, taxes, depreciation and amortisation) margin of 21.2 per cent during the quarter, despite input cost pressures and lower exports.
Total vehicle sales marked a fall of two per cent during the quarter to 994,733 units, against 1.01 million units sold in the corresponding quarter a year ago. Income from operations stood at Rs 6,088 crore for the quarter, a rise of 3.5 per cent, compared with Rs 5,881 crore posted for the corresponding quarter a year ago.
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Exports were badly hit, marking a drop of 22 per cent during the quarter impacted by a fall in Nigeria and Egypt, two of Bajaj’s biggest markets outside India. “Things have started to stabilise in Nigeria and we hope that our exports to that country will be back on track over the next few quarters,” said S Ravikumar, president (business development & assurance).
Exports of motorcycles and commercial vehicles dropped by 22 per cent to 370,649 units, against 476,496 units in the year-ago period.
Domestic sales, meanwhile, reported a rise of 16 per cent, boosted by demand for new products such as the V15 and Avenger. Domestic volumes stood at 624,084 units for the quarter, compared with 536,533 units in FY16.
“Fall in volumes was mainly due to a decline in export volumes by 22 per cent, while domestic volumes increased by 16 per cent. Domestic volume growth is positive, led by good response to recently launched models of Avenger. Outlook on exports will be a key challenge, especially after sharp depreciation of the Nigerian currency. Also update on RE60 launch for exports will be keenly watched,” said Dharmesh Kant, head-retail research, Motilal Oswal Securities.
New launches, a favourable monsoon and the implementation of the Seventh Pay Commission will augur well for growth for the two-wheeler marker.
A brand new model under the Pulsar brand is being readied for launch next month. The Pulsar 400 will be the most powerful Pulsar till date and will borrow its engine from its KTM sibling, the Duke 390. More new products are expected in the third quarter of the year which could be on the V platform.
The V15 is currently selling “around 5,000 units a week in retail while the Avenger is also doing very good. Inventories are at a very satisfactory level,” Ravikumar said.