India's second largest two-wheeler maker Bajaj Auto reported a little lower-than-expected net profit for the third quarter due to one-time losses on foreign exchange hedging. Net profit for October-December was up 19% year-on-year at Rs 795.19 crore.
Analysts on average had expected a net profit of Rs 819 crore in the third quarter, according to a CNBC-TV18 poll.
Bajaj Auto's net sales in the three-month period rose 21.6% from a year ago at Rs 4,839.95 crore, compared with analysts forecast of Rs 5,032 crore.
Bajaj Auto's total motorcycle sales rose 13% year-on-year to 946,749 units in the third quarter. Commercial vehicle sales rose 19% to 128,692 units.
The company said it is on course to exceed its target of 1.5 million vehicle sales for the year, helped by exports, which "continue to be robust and ahead of plan." Its export revenues rose 51% from a year ago to Rs 1,710 crore in the third quarter. It exported 380,912 units, up 28% from a year ago.
The maker of the Pulsar and Discover range of motorcycles had MTM losses to the tune of 58.86 crore in the third quarter as it had entered into foreign exchange contracts to hedge highly probable forecast transactions.
However, MD Rajiv Bajaj was not worried.
"This will be written back, nothing is gone anywhere. It will be returned back as the contracts unfold. Of the Rs 64 crore that we showed as MTM in Q2, I think about Rs 7 crore has been written back, but there has been a further increase because of the further contracts that were booked. Now with the rupee at Rs 50 I would not know the exact calculations at the back of by hand, but most of it would have been written back. So, at some point of time over the next 2 or 3 years it will all be written back, so nothing is lost at all," he told CNBC-TV18.
Excluding the exceptional items, Bajaj Auto said its profit after tax was highest ever at Rs 834 crore.
Higher realizations from exports also led to EBITDA (earnings before interest, taxes, depreciation and amortization) margin expanding to 21% in Oct-Dec, from 20.1% in July-Sep.
"The company has clearly benefited from rupee depreciation on exports revenue, which has offset the slowdown in the domestic side and that in our view increases EBITDA margins by 100-125bps," said Ronak Sarda of MSFL Research.
Centrum Broking analyst Ajay Sethia said Bajaj's new launches going ahead would be critical for the company in the case of domestic sales slowdown.
Bajaj Auto shares initially fell near 2% post the results announcement, but reversed the losses in afternoon trade. At 13:20 hrs, the stock was up 0.5% at Rs 1,462.10 on NSE.
Source: www.moneycontrol.com
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DENIP Consultants Pvt Ltd
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