Bajaj Auto shares surge 5% after Q2 results

Shares of Bajaj Auto were in focus on Thursday, a day after the company reported an increase in net profit by 20% year-on-year (YoY) to ₹1,836 crore in the July to September quarter, as against ₹1,530 crore in the same period last year. Following this, the share price of the automobile manufacturer surged as much as 4.8% in intraday trade to hit a 52-week high of ₹5,401.75.

The scrip opened at ₹5,268.90 on Thursday, up 2.43%, as against the previous session's closing price of ₹5,143.80. At the time of reporting, the share price of the two-wheeler and three-wheeler manufacturer was trading 4.66% higher. During the session, the market capitalisation of the company stood at ₹1,52,327 crore with 46,434 shares exchanging hands on the BSE, as against the two-week average of 0.17 lakh shares. In the year-to-date period, shares of Bajaj Auto have given 50.55% returns.

During the quarter under review, the revenue from operations stood at ₹10,777 crore, up 6%, as against ₹10,203 crore in the corresponding period of the previous year. "Revenue from operations register a new high of ₹10,777 crore, up 6% YoY, underpinned by double-digit volume growth, with the sustained buoyancy on the domestic front cushioning the weak, albeit improving exports performance," says the company.

In the September quarter, the EBITDA (earnings before income, tax, depreciation and amortisation) stood at ₹2,133 crore, up 21% year-on-year (YoY) driven by better realisation and a richer product mix, which more than covered the drag arising from investments on growing electric scooters. The EBITDA stood at ₹1,759 crore in the same period last year.

During the quarter under review, the EBITDA margin expanded by 260 basis points (bps) to 19.8%, as against 17.2% in the same period last year.

Decline in two-wheeler sales

In terms of sales, however, the company witnessed a decline in two-wheeler sales by 19% year-on-year (YoY) in the domestic market. The company sold 5,05,320 units of two-wheelers in the domestic market as against 6,21,134 units sold in the same period last year. This is in line with overall two-wheeler sales owing to a low-level of rural income, according to the latest data by SIAM (Society of Indian Automobile Manufacturers).

"Buoyant domestic business registers a new peak, on the back of six successive quarters of double-digit YoY growth underpinned by a broad-based performance, most notably the sustained competitive growth on 125 cc+ motorcycles and the further acceleration of three-wheeler sales that delivered its highest ever quarter," says the company.

According to the company, the consistent focus on the motorcycle segment has enabled solid market-leading growth (6x YoY vs. the rest of the market in 125cc+).

Uptick in three-wheeler demand

In the three-wheelers category, the company fared well, with 1,32,236 units sold in the domestic market, up 81% YoY as against 73,241 units sold in the same period last year. This is in line with an uptick in overall three-wheeler sales during the quarter under review. “A landmark quarter for three-wheelers as it steps up its volume trajectory to clock historic high sales (01: 99K, 02: 132K units). An encouraging response to the e3W launch has led to advancing of rollout plans - 7 cities now covered with further expansion underway; potential to add incremental volumes from restricted markets that become accessible through the electric offering,” says the company.

The two-wheeler and three-wheeler exports, however, witnessed a decline of 5% and 32%, respectively, during the quarter under review. This is in tandem with a decline by overall automobile exports by 6% owing to geo-political tension and foreign exchange issues, as per SIAM data. 

"Exports stay on course to making a gradual recovery, amidst volatile market conditions - volumes up 8% sequentially. Market share holds steady with volume uptick in Africa, LATAM and SAME allowing for a slight build back of inventory in select markets; actions continue unabated to navigate currency constraints and challenging macros in overseas markets," says the company.