Bajaj Auto, India’s second-largest two-wheeler maker, today reported a 40.42 per cent rise in third-quarter standalone net profit on the back of higher retail demand during the festive period.
The Pune-based company posted a net profit of Rs667 crore, marginally ahead of the average street estimate of Rs635 crore. The company had posted a net profit of Rs475 crore in the year-ago quarter.
With better-than-expected sales and continued attempts to curb manufacturing and other costs, the company was able to maintain its industry-beating earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin at 20.3 per cent.
S Ravikumar, vice-president, business development, Bajaj Auto, said, “The Ebitda margin was maintained at above 20 per cent primarily due to volume growth and price rise which we had taken earlier on. Additional volumes brought in Rs200 crore and price rise gave a Rs140-crore rise. There was an additional impact of Rs210 crore due to raw material price rise.”
Bajaj Auto passed on only two-thirds of its raw material price rise to customers, while the rest was balanced out from cost reduction initiatives and volume growth, said Ravikumar. Total expenses grew by 28.8 per cent to Rs3,358 crore, compared to Rs2,607 crore a year earlier.
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Ajay Sethia, an auto analyst at Centrum Broking, said, “Due to better realisation on products in not just the export market but in the domestic market as well, the company’s net profit was 10 per cent higher than street estimates. The rise in input prices has not impacted the company greatly. We expect its margins to stay at 20 per cent even in the current quarter.”
In the motorcycle segment, Bajaj Auto sells four models — Pulsar, Discover, Platina and Avenger. It also sells three-wheel goods and passenger carriers. The company has exited the gearless scooter segment for the time being.
Sales of Pulsar stood at 262,000 while that of Discover stood at 327,000 during the quarter. Both models account for 70 per cent of the company’s total sales. The company has set a target of selling four million vehicles by the end of this financial year. According to Ravikumar, sales should be in the region of 98-99 per cent of its target. Next year, Bajaj plans to sell 4.7-4.9 million units.
“We do not feel there would be any impact if excise duty is raised to the earlier levels, as the demand fundamentals are quite strong presently,” said Ravikumar.
The Society of Indian Automobile Manufacturers had earlier requested the government to continue with duty incentives, as any withdrawal could affect demand. However, the apprehension is more from car makers.
Bajaj Auto is setting up a manufacturing facility for the low-cost small car it is developing with help from French company Renault and Japan’s Nissan Motor Company. The company said investments in it would start from next year and that it was on track for launching the car by 2012.