Subdued demand amid high fuel prices and costlier lending rates and higher input costs took a toll on Bajaj Auto Ltd’s June quarter performance, as the country’s second largest motorcycle maker reported a marginal increase of one per cent in net profit at Rs 718 crore.
The Pune-based company, which had posted a net profit of Rs 711 crore in the corresponding quarter last year, however, met analysts’ expectations, pushing its stock by 5.2 per cent on BSE to close at Rs 1,522.35 on Wednesday. The benchmark Sensex on Wednesday gained 0.47 per cent to end trade at 17,185.01 points. Sales of the company grew four per cent to Rs 5,048 crore in the April-June quarter, against Rs 4,850 crore posted in the corresponding quarter last year. In volume terms, Bajaj saw total sales fall 1.2 per cent to 10,78,971 units, compared with 10,92,815 units it sold a year ago.
Margin of earning before interest tax depreciation and amortisation (Ebitda) stood at 19.4 per cent, an improvement over the corresponding quarter last year of 19.1 per cent, but lower than last year’s 20.2 per cent.
Revenue from exports, which contributed 34 per cent to overall turnover, grew three per cent to Rs 1,738 crore as import barriers and restriction put in place by some countries like Egypt and Sri Lanka saw the company lose sales. Bajaj Auto is India’s largest two and three-wheeler exporter.
“The company has held on to its margins despite a fall in three-wheeler exports and a slight fall in domestic sales. Demand could improve from the third quarter onwards with the onset of festivals and new launches,” said an analyst from a Mumbai-based brokerage firm.
Subdued domestic demand following rising fuel costs and costlier lending rates led to a near stable market share of the company at 23 per cent in the motorcycle segment. It is not present in one-fourth of the market comprising scooters and mopeds.
“Domestic market witnessed a growth of about six per cent. Bajaj Auto, in contrast, witnessed a flat sale. The above statistics is based on the billing numbers as reported by the manufacturers. However, on tracking the retail numbers, there seems no significant change in company’s market share at retail level,” said the company in a release.
Indian companies like Bajaj Auto, Hero MotoCorp and TVS Motor Co are coming under pressure from Japanese rivals like Honda Motor Co, India Yamaha Motor and Suzuki Motorcycle India, which are ramping up operations and launching new products in the market.
While Honda has lined up five launches this year, Yamaha is gearing up to enter the scooter segment. Suzuki has recently launched an entry level bike to challenge segment leader Hero MotoCorp. However, Bajaj is expecting a revival in the second half of the current year after one of new motorcycles hitting the market, while two recently launched bikes will be extended to outlets across India. Festival demand and improvement in economic activities are expected to help improve sales in the second half.
| A SUBDUED SHOW India’s second-largest motorcycle maker reported flat net profit for the June quarter but saw its shares jump as its profit margin weathered a slump in exports | ||||
| Q1 FY12 | Q1 FY13 | Change | FY12 | |
| Net profit (Rs cr) | 711 | 718 | 1% | 3,004 |
| Sales (in numbers) | 1,092,815 | 1,078,971 | -1% | 4,349,560 |
| Turnover (Rs cr) | 4,850 | 5,048 | 4% | 20,137 |
| Export revenue (Rs cr) | 1,688 | 1,738 | 3% | 6,604 |
| Operating margin | 19.1% | 19.40% | — | 20.20% |
| Source: Company | ||||
“The newly launched generationnext Pulsar 200 NS, which will open at pan-India level shortly, would further strengthen company’s leadership position. The company has planned a launch in the commuter deluxe segment also,” the company said.
