Bajaj Auto in top gear on better-than-expected Q2 results

MUMBAI: Bajaj Auto was the top gainer of the benchmark index Sensex after it reported better than expected earnings on Wednesday. The two-wheeler major’s net profit jumped 13 per cent on the back of improving domestic realisations and weak rupee.

Bajaj Auto posted a net profit of Rs 837 crore for the quarter, up 13 per cent, compared with Rs 740 crore in the corresponding quarter last year. Revenue rose to Rs 5,334 crore, as against Rs 5,100 crore in the year-ago period.

Margins adjusted for forex losses stood at impressive 23.1 per cent.

“Bajaj Auto’s PAT of Rs 8.8 billion in 2QFY14 was ahead of our expectations of Rs 8.3 billion. The beat on profitability has come primarily on account of EBITDA margin expansion in Q2 to 22.6 per cent (vs our expectation of 20.6 per cent) on higher realizations in the domestic market and exports,” said Barclays report.

“However, a higher incidence of tax at ~30 per cent of PBT (vs 27.5 per cent expectation) has limited the beat at the PAT level. With new launches expected in 2H, we expect Bajaj’s volumes and profitability to remain strong. We retain our EW rating on the stock as Bajaj Auto remains our preferred name within the 2W space,” the report added.

At 09:35 a.m.; the stock was at Rs 2,170, up 2.16 per cent, on the BSE. It touched a high of Rs 2,180 and a low of Rs 2,155 in trade today.