Bajaj Auto Q2 net profit up 58 per cent to Rs 933 crore on higher exports

MUMBAI: Bajaj Auto, India's largest two-wheeler exporter, posted a better-than-expected 58 per cent increase in net profit for the September-ending quarter, in part due to higher realisation from exports and benign commodity prices as volume growth was marginal.

Net profit for the second quarter rose to Rs 933 crore from Rs 590.90 crore a year earlier. A factor that helped the profit growth was a one time expense of Rs 340 crore it took in the year-earlier quarter towards the National Calamity Contingent Duty Case from Uttarakhand government.

Revenue rose 2.6 per cent to Rs 5,980.63 crore. Operating margin improved 1.3 percentage point to 22.1 per cent, a percentage point higher than the estimates of leading brokerage houses, helped by lower cost.

The results sent the company’s shares as high as 4 per cent, before they settled 3.3 per cent up at Rs 2518.25 on the Bombay Stock Exchange.

The profit was boosted by higher realisation, both in domestic and export markets, and a richer product mix which led to additional gains of around Rs 180 crore in the company's profit before tax, S Ravikumar, president-business development at Bajaj Auto, told ET. This has happened at a time when the sales volume rose just 4 per cent on a sequential basis.

On the way forward, Ravikumar said: “We are launching three new variants of the Avenger in October and will be launching a mid - size bike by the last quarter of the current fiscal year. On the three wheeler side, the Maharashtra government has opened up extra permit of 1.15 lakh. This would add to our volume growth in the commercial vehicle space.”

While the company will be relying on new launches to bring in excitement, Ravikumar said the demand environment continued to remain challenging.


“Competition has been increasing inventory level ahead of the festival season. But so far we have not seen major pickup in volumes on account of the festival season,” he said. “We are not pushing our products to dealer by offering on credit as it creates huge problem in retail and wholesale numbers.”

The company sold 1.57 million vehicles in the past quarter, compared with 1.56 million in the year earlier period.

Exports of 0.52 million units during July-September were the highest ever for a quarter, but Ravikumar cautioned that the third quarter could see a bit of softening due to demand challenges faced in Sri Lanka and Nepal. But he maintained that the company would achieve its estimated volume of 2 million units out of exports annually. At home, Bajaj Auto, which ended the last fiscal year with a market share of 20 per cent in the motorcycle segment, has been consistently improving its share. At the end of second quarter, the market share improved to almost 22 per cent and the company is confident of closing this year with a 23 per cent share in the motorcycle space.