Bajaj net slides 5%, as do home sales, though exports keep up

Bajaj Auto, the country’s third biggest two-wheeler maker, reported a five per cent decline in net profit for the December quarter, hit by falling demand for its motorcycle range in the domestic market.

The Pune-based company posted net profit of Rs 861 crore, against Rs 905 crore in the same quarter a year before. The profit, however, beat the market estimate of Bloomberg, which expected it to be Rs 836 crore.

Robust exports, led by large motorcycle orders from Sri Lanka, helped offset the fall in domestic volumes. The latter sales, led by a fall in the Discover motorcycle brand, was 438,849 units, down 17 per cent from the same quarter a year before. Total two-wheeler and three-wheeler volumes fell one per cent to 984,520 units, as against 993,690 units earlier.

S Ravikumar, president (business development), said: “We maintained our Ebitda (earnings before interest, taxes, depreciation and amortisation) margin. Net profit is down because of a reduction in investment income. All brands are doing well, except for Discover.”

Net sales was Rs 5,520 crore, a fall of 10 per cent from the Rs 5,024 crore a year before. The Ebitda margin at 21.1 per cent beat last year's in the same quarter.

Arun Agarwal, automobile analyst, Kotak Securities, said: “The result was better than our expectation. Higher depreciation and lower other income led to adjusted net profit declining. The company is banking on new launches to gain domestic market share in the 100cc segment. Exports are expected to continue to grow at a healthy pace.”

On the export front, sales grew 16 per cent in the quarter, at 490,000 units. Now 49 per cent of net sales, these have been fetching better margins, as was seen with a 26 per cent growth in net sales. The company expects export to grow beyond 500,000 units in the year’s last quarter.

To reclaim market share, Bajaj aims to launch a product each month. This includes new ones and refurbishment. It launched an electric-start version of the Platina motorcylce last week.

Bajaj Auto Limited