Q2 Results: Bajaj Auto’s Profit Meets Estimates, Margins Contract

Bajaj Auto Ltd.’s quarterly profit growth slowed as expected due to rising commodity costs.

The two-and three-wheeler maker reported a net profit of Rs 1,152 crore in the three months ended September, an increase of 3.7 percent from the year-ago period, according to its stock exchange notification. That compares with the Rs 1,140-crore consensus forecast of analysts surveyed by Bloomberg.

Revenue rose 21 percent on a yearly basis to Rs 7,986 crore, led by higher volumes— analysts expected Rs 7,982 crore.

The company sold 13.3 lakh units between July and September, a year-on-year increase of 25 percent, led by the healthy growth in commercial vehicle sales. The automaker’s exports rose 32.8 percent year-on-year to 5.34 lakh units during the period.

“The result was below what we had expected,” Mitul Shah of Reliance Securities said. He expects improvement led by the higher exports and realisations at a high exchange rate.

Earnings before interest, tax, depreciation and amortisation rose 3 percent on a yearly basis to Rs 1,341 crore—the consensus estimate was Rs 1,385 crore. The company’s operating margin, however contracted to 16.8 percent from 19.7 percent—analysts had forecast 17.4 percent.

“Cost of goods sold has risen by 3 per cent on a year on year basis,” Ankit Merchant, research analyst, institutional equities at SMC Global Securities Ltd., told BloombergQuint. “This has lead to weak margins performance of the company.”

Shares of Bajaj Auto fell as much as 4.3 percent to trade at their lowest in two-and-a-half years after the results were announced.

(Corrects an earlier version that misstated the name of Ankit Merchant’s broking firm)