Bajaj Auto Q2 net profit up 35% on strong exports, product mix

Mumbai: Bajaj Auto's standalone net profit rose 35% year-on-year in the September quarter, beating analyst estimates, as strong export growth and a richer product mix helped offset higher input costs.

Net profit rose to ₹3,354 crore from ₹2,480 crore a year earlier. Revenue from operations grew 34% to a record ₹20,003 crore. A Bloomberg poll of brokerages had estimated standalone net profit at ₹3,152 crore on revenue of ₹18,917 crore.

Net profit for the consolidated entity rose 62% to ₹3,436.1 crore on revenue of ₹25,125.6 crore. Ebitda margin at the maker of Pulsar motorcycles and Chetak e-scooters inched up to 21% from 20.5% a year earlier. Input costs rose 7% between the June and September quarters, driven by commodities, electronics and polymers, joint managing director Rakesh Sharma said on a media call. However, the company managed to mitigate the increase through selective price hikes, higher realisations, dollar-denominated export earnings and a richer product mix. "Our first impulse is always to recover the cost," Sharma said, explaining that the company raised prices selectively depending on competitive conditions in individual product segments.

Exports grew 41% during the quarter, outpacing the 2% domestic growth. Bajaj Auto expects to maintain exports, which yield more profits, at about 750,000 units a quarter, supported by demand in Africa, Latin America and parts of Southeast Asia. Growing contribution of electric vehicles to total sales helped protect margins, said Sharma. The Chetak electric scooter business has turned profitable, while three-wheelers continue to generate double-digit margins.

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Sharma flagged an uneven recovery in the domestic two-wheeler market, with premium motorcycles and electric scooters outperforming entry-level models. He warned that drought conditions in parts of Maharashtra, southern India and the Northeast could further weaken rural demand by affecting household incomes.

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Poor crop outcomes could also make lenders more cautious about financing rural customers. "The postponement of decisions at the bottom of the pyramid" is already visible, he said, adding the impact of the drought could become more pronounced in the coming months.