Bajaj Auto’s Margins Hit Lowest Level In Eight Years
Bajaj Auto posted a net profit of Rs 924 crore.
Bajaj Auto Ltd.’s quarterly margins fell to the lowest in more than eight years as falling demand for its motorcycles was aggravated by a transition to new emission norms and the Goods and Services Tax.
Net profit declined 5.6 percent to Rs 924 crore in the quarter ended June over the year-ago period, the company said in an exchange filing. That was higher than Rs 908 crore consensus estimate of analysts tracked by Bloomberg, largely due a surge in other income.
Volumes fell 10.7 percent to 8.88 lakh vehicles, bringing revenue down by 3.9 percent to Rs 5,854 crore. That surpassed the forecast of Rs 5,499 crore.
Domestic sales of Pune-based motorcycle maker declined nearly 23 percent in the three months ended June, according to data from Society of Indian Automobile Manufacturers. That’s partly because demand for scooters rose at five times the pace of motorcycles for the entire two-wheeler industry during the period.
Sales of Bajaj Auto have fallen in all except two of the last 13 months, according to SIAM data. Lack of presence in the rural market and dependence on the Discover and Pulsar platforms added to its underperformance, Ashwin Patil, equity research analyst who tracks automobile and ancillary sector at brokerage LKP Securities, had told BloombergQuint earlier in the month.
The company’s earnings before interest, tax, depreciation and amortisation fell 20.2 percent to Rs 938 crore in April-June, and margins contracted to 17.2 percent from 20.2 percent.
The margins are the lowest since the quarter ended March 2009, Patil said on Thursday. And the decline in profit was cushioned by a 71 percent increase in other income, he said.
The performance was impacted by the changeover to Bharat Stage IV emission norms and the transition to the Goods and Services Tax regime, which was rolled out on July 1, the company said in the filing. The performance in the July to September quarter will be better, it said.
Going forward, with potential to bring back stock levels within the network, introduction of new variants and steps initiated on mass communication and ground field activities, performance for second quarter of current financial year is anticipated too be much better.Bajaj Auto’s Exchange Filing
Domestic Sales Struggle
- Overall domestic sales declined 23 percent year-on-year to 4.78 lakh vehicles.
- Motorcycle sales declined by almost 22 percent to 4.26 lakh units.
- Commercial vehicle sales slumped 30 percent to 52,347 vehicles.
Exports Outperform
- Exports rose 10 percent to 4.09 lakh units.
- Motorcycle exports rose 8 percent to 3.49 lakh bikes.
- Commercial vehicle exports rose 28 percent to 60,373 units.
The Bajaj Auto stock dropped as much as 0.84 percent to Rs 2,800 after the announcement.