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Q1 Results: Bajaj Auto Meets Estimates, Gains Domestic Market Share

Net profit remained largely unchanged at Rs 1,125.70 crore over last year.

The Pulsar motorcycle, one of Bajaj Auto’s bestselling vehicles, parked outside a company showroom in Mumbai, India (Photographer: Adeel Halim/Bloomberg)
The Pulsar motorcycle, one of Bajaj Auto’s bestselling vehicles, parked outside a company showroom in Mumbai, India (Photographer: Adeel Halim/Bloomberg)

Bajaj Auto Ltd.’s first-quarter profit met estimates even as raw materials expenses rose.

Net profit rose nearly 1 percent year-on-year to Rs 1,125.70 crore for the quarter ended June, the Pune-based company said in an exchange filing. That’s in line with the Rs 1,080-crore consensus estimate of analysts tracked by Bloomberg.

Revenue rose 3.8 percent year-on-year to Rs 7,755.8 crore against the analysts’ estimate of Rs 7,515 crore. The company’s domestic motorcycle market share rose 200 basis points year-on-year to 18.3 percent in the first quarter, the filing said. That may have helped the automaker report a marginal increase in revenue. Revenue was also offset by total expenses that rose 6 percent year-on-year to Rs 6,618.3 crore, driven by higher raw material costs.

The automobile sector is in the middle of a slowdown that started during the Diwali festive season last year due to higher fuel prices, increased upfront insurance costs and increased inventory at dealerships. That has triggered job losses at both automakers and showrooms to cut costs. At least 25,000 people have lost jobs in the last year and half as nearly 271 car and two-wheeler showrooms shut across the country, according to data provided by Federation of Automobile Dealers Association. That’s in addition to the 1,800 job losses at the Gurugram-Manesar manufacturing belt.

The automaker’s earnings before interest, tax, depreciation and amortisation fell 10.5 percent to Rs 1,198 crore—in line with the consensus estimate of Rs 1,180 crore. Operating margin contracted 250 basis points to 15.5 percent in the quarter.

Revenue was largely in line with street expectations, said Ankit Merchant, auto analyst at SMC Institutional Equities. “The worrying part is the operating and manufacturing expenses and employee costs which has gone up on yearly basis.” Merchant attributed these factors to a “lacklustre” operational performance.

Highlights (YoY)

  • Cash and cash equivalents at Rs 17,126 crore.
  • Other income rose 20 percent to 441 crore.
  • KTM, in which Bajaj Auto owns 48 percent, reported a loss of 2.2 million euros.
  • Domestic sales grew 1 percent to 6,97,153 units.
  • Motorcycle exports jumped 8 percent to 4,71,691 units.
  • Overall commercial vehicles declined 16 percent to 1,64,547 units.

Shares of Bajaj Auto rose as much as 4 percent ahead of the Q1 results announcement compared with the Nifty Index that remained largely unchanged.

Q1 Results: Bajaj Auto Meets Estimates, Gains Domestic Market Share