Q4 Results: Bajaj Auto Beats Slowdown Blues Even As Margin Contracts
Bajaj Auto Ltd. was able to skirt an industry-wide slowdown as it reported a better-than-expected profit in the March quarter.
Net profit rose 21 percent year-on-year to Rs 1,306 crore in the January-March period, the two-wheeler maker said in an exchange filing. That compares with the Rs 1,042-crore consensus estimate of analysts tracked by Bloomberg.
- Revenue rose 9 percent over last year to Rs 7,395 crore.
- Operating profit fell 13 percent to Rs 1,161 crore.
- Margin narrowed 390 basis points to 15.7 percent.
Sales of India’s automakers slowed since festival season last year as demand fell due to higher upfront insurance costs and rising fuel prices. Year-end discounts, too, failed to lift sales, leading to piling up of inventory at dealerships.
Even then the market share of the Pune-based two-wheeler maker increased more than 300 basis points to 18.7 percent, according to its media statement. That was on the back of a shift in strategy for Bajaj. The company is now focussing on cheaper entry-level bikes, junking its margin over market share policy. In the entry level segment, it has recorded a 52 percent growth and improved its market share to 35.4 percent.
Bajaj Auto’s motorcycle sales during the quarter rose 23 percent over last the year to 610,094 units. Commercial vehicles sales were down 16 percent. Exports, too, increased 13 percent to 4.8 lakh units..
There was also a reversal of an exceptional item to the tune of Rs 342 crore in the quarter. The amount attributed as payments made towards National Calamity Contingent Duty in pursuant to a High Court order in 2014. The charge, however, was reversed pursuant to a Supreme Court order on March 27, 2019, according to the notes to accounts of the quarterly report.
Meanwhile, the board has recommended a dividend of Rs 60 apiece, amounting to a total of Rs 2,093 crore, including tax.
Shares of Bajaj Auto jumped over 3 percent during the day’s trade after the results were announced. That compares with the benchmark BSE Sensex’s 1.33 percent gain as of 3:13 p.m.