 "Rajiv Bajaj believes that Pulsar has successfully managed its brand extensions by sticking to its core positioning promise of a sporty performance-oriented bike")
Higher exports and better realisations at home helped boost the net profit of Pune-based Bajaj Auto, India’s second largest two-wheeler manufacturer, by 58 per cent in the recently concluded quarter.
The maker of Pulsar and Discover motorcycles beat Street estimates posting a net profit of Rs 933 crore for the quarter ended September against Rs 591 crore posted in the year-ago quarter. A Bloomberg poll of analysts estimated the net profit at Rs 905 crore for the reporting quarter.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) margins expanded 100 basis points (bps) sequentially and 130 basis points year-on-year to 22.1 per cent, pushed by a new range of high margin Pulsars and three-wheelers. Tighter cost control measures, improved other income, and benign input costs have also helped improve profits.
Ravi Shenoy, vice-president, midcaps research at Motilal Oswal, said: “Bajaj Auto results were above estimates, boosted by higher other income at Rs 150 crore. Another factor that has contributed to higher than estimated profits is a 130 bps jump in margins.”
The average revenue per unit sold stood improved at Rs 57,700 during the quarter compared to Rs 56,491 recorded in same quarter last year and Rs 55,400 recorded in the April-June quarter. The company said it has improved market share in the premium space to 66 per cent and so has ramped up production for newly-launched Pulsars such as AS 150 and AS 200 and RS to bring down their waiting period.
Growth in net profit has come on the back of flat sales, which stood at 1,056,596 units against 1,055,582 units sold in the same period a year ago.
In the domestic market, the company recorded sales of 536,596 units during the quarter, a fall of 7.4 per cent from the same quarter last year.
Bajaj's income from operations grew 2.26 per cent to Rs 6,098 crore for the reporting quarter compared to Rs 5,963 crore posted in the same quarter a year ago. Income was in line with the Bloomberg estimate of Rs 6,028 crore.
Despite a dip in domestic demand following stronger competition from Hero and Honda, the company's export markets have helped it lift overall sales.
S Ravikumar, president (business development) and assurance at Bajaj Auto, said, “We were just 5,000 units shy of the one-million export target in the first half of this year. We’re expecting some headwinds in the third quarter in markets like Nepal and Sri Lanka. However, we are confident of achieving the set target of two million units by March.”
Exports, which account for 45 per cent of Bajaj’s overall turnover, was the highest ever at 520,000 units. Average realisation per USD was better at Rs 65.2 during the second quarter compared to Rs 63.9 in the first quarter.
Bajaj has lined up a series of launches in the coming months with three of them hitting the market next week. It will launch a new version of cruiser bike Avenger and its variants, which, according to Ravikumar, would push up realisation even higher. From 4,000 units a month Bajaj is expecting Avenger sales to hit 15,000 units a month.
From 4,000 units a month, Bajaj is expecting Avenger sales to hit 15,000 units a month.
A new product launch will happen in the last quarter, which will be in the mid-segment (125-150cc), said the senior company official. The company also promised to launch the Pulsar 400, which is likely to happen by the end of this year or early next year. This will be the most expensive product from the company.
