Employees work on the assembly line at the Bajaj Auto Ltd. plant in Chakan, India. (Photographer: Adeel Halim/Bloomberg)

Q3 Results: Bajaj Auto’s Profit Beats Estimates, Margin Contracts

Bajaj Auto Ltd.’s profit rose for the fifth straight quarter surpassing estimates even as the margin contracted.

The two- and three-wheeler maker reported a net profit of Rs 1,102 crore in the three months ended December, an increase of 16 percent from a year earlier, according to its exchange filing. That compares with Rs 1,047 crore that analysts surveyed by Bloomberg had forecast. Its other income jumped 125 percent year-on-year to Rs 470 crore.

Revenue rose 16 percent on a yearly basis to Rs 7,409 crore, led by higher sales volume. The analysts tracked had pegged the top line at Rs 7,467 crore.

The company sold over 10 lakh units between October and December, an increase of 26 percent from the corresponding quarter last year, led by a healthy growth in motorcycle sales. The automaker's exports rose 23.5 percent year-on-year to 5.24 lakh units.

But its operational performance missed estimates. Operating income or earnings before interest, tax, depreciation and amortisation fell 7 percent on a yearly basis to Rs 1,156 crore—the estimate was Rs 1,203 crore. The company’s operating margin contracted to 15.6 percent during the period from 19.5 percent—analysts had forecast 16.1 percent.

The Pune-based motorcycle manufacturer’s operating margin was the lowest in at least nine years on higher raw material costs.

Bajaj Auto’s margin pressure trend would continue to remain in the near-term, Bharat Gianani, research analyst at Sharekhan told BloombergQuint in an interaction. “Bajaj Auto had changed its strategy to give priority to market share and that would continue for a while.”

Shares of Bajaj Auto fluctuated between gains and losses after the results were announced compared with a 0.17 percent rise in the Nifty 50 Index.

(Corrects an earlier version that misstated that Bajaj Auto’s profit fell)