Riding high on export volumes, Bajaj Auto, the country’s second biggest two-wheeler maker, posted a stand-alone net profit of Rs 795.19 crore, up 19 per cent for the reporting period as against Rs 667 crore posted in the corresponding quarter last year.
Margins were slightly below market estimates, as analysts expected the company’s net profit to be in the region of Rs 800-802 crore.
A slowdown in the domestic demand for motorcycles impacted the Pune-based company the most among all two-wheeler manufacturers of the country, as its local sales during the quarter grew by only seven per cent to 642,395 units as compared to 598,558 units sold in the same quarter last year.
Despite a slump in motorcycles offtake, the scooter segment, where Bajaj is not present, has grown in high double digits so far this year, selling 1.84 million units during the nine months.
Bajaj does not expect a quick reversal in demand in the current quarter. It is likely to miss the 20 per cent growth target set for the full year. The company said sales would likely close at 4.4 million units as against the targeted 4.5 million units set earlier. During the nine months, the company sold 3.33 million units.
| RACING AHEAD | |||
| Rs crore | % Growth | ||
| Q3 2010 | Q3 2011 | ||
| Sales (in nos) | 946,850 | 1,075,441 | 13.58 |
| Net sales | 3,980 | 4,839 | 21.58 |
| Total Expenditure | 3,358 | 4,033 | 20.10 |
| Profit* | 818 | 1,029 | 25.79 |
| Net profit | 667 | 795 | 19.19 |
| *Profit from operations before other income, interest, tax and exceptional items Source:- Companies | |||
“We have been able to sell 3.3 million units in the first three quarter of this fiscal,” said Senior Vice-President S Ravikumar (business development and assurance). “We expect to sell 1.1 million units in the last quarter of this fiscal. The market ahead looks challenging and we plan to launch some models in 2012.”
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The company’s net sales stood at Rs 4,839 crore for the reporting quarter, a growth of 21 per cent as compared to Rs 3,980 crore posted in the same quarter last year. It suffered a valuation loss of nearly Rs 59 crore on derivative hedging instruments. Bajaj has entered into foreign exchange contracts to hedge highly probable forecast transactions.
The company’s total volumes (motorcycles and three-wheelers) have grown by 14 per cent in the quarter at 1,075,441 units, but its domestic volumes have grown by only 7 per cent to 694,529 units as compared to 650,206 units. In addition, the company lost market share by 1 percentage point in motorcycles during the quarter.
According to senior Bajaj officials, the domestic demand has softened of late, mainly due to the broader contraction in automotive demand. “Sales during festive season were satisfactory,” stated a company release. “However, towards (the) end of November, industry sales witnessed a slowdown.”
CLSA Asia-Pacific Markets said the independent equity brokers and financial-services group hda cut its motorcycle industry growth forecast for FY13 from 14 per cent to 8 per cent. “After three years of above trend growth, two-wheeler growth is moderating. Our analysis of two-wheeler growth over the last 20 years suggests that it is unlikely that growth will enter negative territory but mid-single digit growth for a couple of years cannot be ruled out,” it stated in a release. “This is worrisome, as the slowdown comes at the time of rising competition from Honda. Shrinking earnings visibility given slowing growth and rising competition makes a case for multiples to contract.”