Bajaj Auto Q4 Results: Profit Meets Estimates Despite Input Cost Pressures
The assembly line at the Bajaj Auto Ltd. plant in Chakan, India. (Photographer: Adeel Halim/Bloomberg)

Bajaj Auto Q4 Results: Profit Meets Estimates Despite Input Cost Pressures

Bajaj Auto Ltd.’s quarterly profit rose, in line with estimates, even as two-wheeler demand remained under pressure on account of high ownership cost and increased input prices.

Net profit for the Pune-based company rose 2% year-on-year to Rs 1,332 crore in the January-March period, according to an exchange filing. That compares with the Rs 1,312-crore consensus estimate of analysts tracked by Bloomberg.

Q4FY21 Highlights (YoY)

  • Revenue rose 26% to Rs 8,596 crore, against the Rs 8,189-crore forecast.

  • Operating profit, or earnings before interest, tax, depreciation and amortisation, rose 22% to Rs 1,524 crore.

  • Operating margin, however, contracted to 17.7% from 18.4%, in line with the forecast.

Bajaj Auto sold 17% more vehicles over the year earlier at 11.69 lakh units in the quarter ended March. But that was mainly because of a low base as the industry was gearing up for transition to BS-VI emission standards around the same time last year.

Rural India was expected to drive two-wheeler sales in India, buoyed by a good monsoon, a bumper crop, increased government spending to boost the economy and less severe Covid-19 restrictions compared to urban centres. But the higher cost of ownership due to costly fuel, a series of price hikes prior to the pandemic and then again recently to counter the surge in commodity costs and the lockdown caused sales to tumble.

Bajaj Auto in the filing also acknowledged the sharp increase in input cost in the fourth quarter, and expects it to continue increasing in the ongoing three-month period ending June. That corroborates with BloombergQuint’s conversation with dealers across the country indicating a pile-up in two-wheeler inventory.

Rakesh Sharma, executive director at Bajaj Auto, said the demand situation is ambiguous again because of the fresh surge in coronavirus cases. But “supply chain disruption both at vendors side and at our plants are much better manageable this year compared to last year,” he said. “[We] remain optimistic for demand to return swiftly.”

Rahul Bajaj Resigns

Rahul Bajaj has resigned as the chairman of Bajaj Auto, the company said in the filing accompanying the results.

“Rahul Bajaj has made a huge contribution to the success of the company and the group over the last five decades,” the company said in the statement. “Considering his tremendous experience and in the interest of the company and to continue to benefit from his experience, knowledge and wisdom in an advisory role and as a mentor, the board of directors has approved the appointment of Rahul Bajaj as chairman emeritus of the company for five years with effect from May 1, 2021.”

Niraj Bajaj, non-executive director, will succeed Rahul Bajaj as chairman at the company.

Shares of Bajaj Auto dropped as much as 2.12% to Rs 3,807 apiece after the results were announced compared with a flat Nifty 50.

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