Bajaj Auto beats street as other income helps Q2 net up 2%

India's second largest two wheeler maker Bajaj Auto  's second quarter net profit rose 2% year-on-year to Rs 741 crore, helped by higher other income, while its core motorcycle and CV business hit the speed bumps.

Its revenue in July-Sep quarter was at Rs 5,139 crore, down 4%. It sold 10.49 lakh vehicles in the quarter, 10% lower than what it did in the year ago quarter.

"The motorcycle industry, which witnessed a CAGR (compounded annual growth rate) of 15% over last 4 years, witnessed a decline of 9% in the second quarter. Added to this was the overall inflationary pressures, rise in input cost and depreciating rupee forcing the government to increase fuel prices," Bajaj Auto said on Saturday.

The results, were however, better than analysts expectations of a net profit of Rs 685 crore, on revenue of Rs 4,825 crore, according to a CNBC-Awaaz poll.

Bajaj Auto's other income last quarter rose 7% to Rs 167 crore and the company also had Rs 95 crore valuation losses on derivative hedging instruments in the year ago quarter.

The company's operating EBITDA during the quarter declined 6% to Rs 992 crore and EBITDA margin was at 19.7%, down from 20.1% a year ago but up 30 basis points sequentially.

Bajaj Auto's total motorcycle sales in July-Sep declined 10% year-on-year to 9.29 lakh units and three-wheeler commercial vehicle sales were down 12% to 1.21 lakh units.

Its motorcycle sales in India slipped 12%, while exports were down 5%. On the CV side, the picture was opposite, with domestic sales rising 3% and exports tumbling 22%.

Helped by the new launches like Discover ST and Pulsar 200 NS motorcycle, the company's market share increased to 27% in September from 23% in April, it said. Overall, including domestic sales and exports its market share was at 33% last quarter.

Bajaj Auto's exports to Sri Lanka one of its key markets were impacted since the government hiked duties sharply in April. As against average sale of around 12,000 motorcycles per month, current sales are at 6,500 units, Bajaj Auto said. CV sales to the island nation have recovered to 7,500 units, it added.

On the road ahead, Bajaj said that Africa continues to do well, but in other markets demand is subdued in-line with the overall global slowdown. For CVs, with opening of new permits (auto rickshaw permits issued by various state governments), outlook for domestic sales is "encouraging." the company said.

As of Sep 30, Bajaj Auto had surplus cash and cash equivalents of Rs 4,521 crore.

Bajaj Auto shares closed at Rs 1,772.10, down 0.1% on NSE on Friday.

Source: www.moneycontrol.com

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Gaurav Agarwal
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DENIP Consultants Pvt Ltd