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Informist, Tuesday, Jul 16, 2024

 

--Bajaj Auto: Saw uptick in prices of aluminium, rubber, copper QoQ 

--Bajaj Auto: Chetak mkt share up on lower price, showroom expansion 

--Bajaj Auto: Introduced CNG two-wheeler for long-distance use 

--Bajaj Auto: CNG 2-wheeler bookings mainly from Maharashtra, Gujarat 

--Bajaj Auto: Got around 4,200 bookings for CNG motorcycle till Jul 15 

--Bajaj Auto: May bring higher-capacity 2-wheeler on CNG platform 

--Bajaj Auto: Selling 2,000 units of Triumph per month in India 

--Bajaj Auto: Plan capex of 7-8 bln rupees in FY25 

--Bajaj Auto: FY25 capex largely for new electric 3-wheeler facility 

By Darshan Nakhwa 

 

MUMBAI – Two- and three-wheeler maker Bajaj Auto Ltd today reported strong year-on-year growth in key earnings metrics for the June quarter, beating analysts' estimates. This growth was led by a 7% increase in overall sales volume to 1.10 mln units in Apr-Jun, richer product mix, higher average selling price, and softening of raw material costs.

 

The Pune-based automaker's net profit for the quarter was 19.88 bln rupees, up 19% from 16.65 bln rupees in the year-ago period. Its operating profit, or earnings before interest, taxes, depreciation and amortisation, surged 24% on year to 24.15 bln rupees.

On the profitability front, the company reported an expansion of 130 basis points on year in EBITDA margin to 20.2%. Increased share of high-margin products in total despatches, better realisation, and moderation in prices of raw materials aided EBITDA margin growth in Apr-Jun.

 

In the June quarter, prices of aluminium, copper, lead, and rubber rose 6-16% on quarter. However, prices of domestic and Chinese cold rolled coil steel were down 1.2% and 8.1%, respectively, according to Kotak Institutional Equities. On a year-on-year basis, prices of domestic cold rolled coil steel, aluminium, lead, copper, and rubber declined 2-31%.

 

Bajaj Auto reported strong growth in the above metrics as the growth in topline surpassed expenses. The company's revenue from operations surged 16% on year to 119.28 bln rupees. However, its other income fell 7% on year to 3.21 bln rupees. The company's topline was driven by volume expansion in both domestic and export businesses, and a favourable product mix.

 

In a call post-earnings, Bajaj Auto's Executive Director Rakesh Sharma said the company remains focused on driving top-line growth while maintaining best-in-class profitability. "The results of this quarter are an outcome of this strategy. Going forward, we will continue on the same path, and create more platforms for growth. Platforms which will connect us with opportunities in the market and can be scaled up," he said.

 

Brokerages had anticipated a net profit of 19.53 bln rupees, EBITDA of 23.45 bln rupees, EBITDA margin of 20%, and a topline of 117.24 bln rupees for the June quarter.

 

In Apr-Jun, the company's total expenditure rose 14% on year to 96.27 bln rupees, led by the cost of raw materials and other expenses. Cost of raw materials, the biggest expense incurred by the company, rose 12% on year to 75.17 bln rupees, and other expenses grew 26.4% on year to 7.32 bln rupees. Its finance costs surged the most by 71% on year to 206.7 mln rupees. The company also incurred a tax expense of 6.34 bln rupees, up from 5.40 bln rupees in the year-ago period.

 

WHOLESALE VOLUMES

In Apr-Jun, the company's wholesale sales volume rose 7% on year on account of high single-digit growth in both domestic despatches and exports. The company sold a total of 1.10 mln vehicles during the quarter, compared with 1.03 mln units sold in the year-ago period. Its domestic sales grew 8% on year to 690,621 units, and exports rose 7% on year to 411,435 units. 

The company recorded healthy year-on-year growth in overall sales on account of an improvement in rural demand on expectation of above normal rainfall. It also reported a recovery in exports against Apr-Jun 2023, when it had recorded 34?cline in sales on account of macroeconomic uncertainty and currency depreciation in key international markets. 

 

In Apr-Jun, Bajaj Auto's export revenue grew in double-digits on a year-on-year basis, with Latin America clocking its highest ever growth and an improvement in Asia. Consistent growth and market share gains over time has led Latin America to emerge as the largest region in terms of exports the in June quarter, the company said.

 

"Overall, there is a small but steady revival in the overseas market, and the number of countries which remain under stress conditions are also slowly reducing," said Sharma. "Africa continues to underperform almost all major markets, led by Nigeria. Though we have seen currency stabilisation for the last few weeks in Nigeria, the substantial devaluation-led inflation has seriously dented demand."

 

Compared to Apr-Jun 2022-23, exports to Africa were down 40%. However, they were up by 20% in West Asia and North Africa and by 70% up in Asia, led by the Philippines and Nepal. Latin America delivered an outstanding performance with 26% growth, said Sharma.

 

In the June quarter, two-wheelers comprised 86% of the company's total dispatches. It sold 582,497 units in India, representing a growth of slightly over 7% on year. In comparison, exports of two-wheelers rose just over 6% on year to 368,420 units.

 

In the motorcycle segment, thrust on premiumisation of Pulsar motorbike led it to deliver among its strongest quarters, retaining a double-digit growth trajectory, the company said in a press release. Bajaj Auto recorded three times growth over the rest of the industry in the sports motorcycle category, buoyed by product upgrades.

 

In Apr-Jun, the company sold 19,000 units of Triumph motorcycles. In India, the company clocked sales of around 2,000 units per month. The majority of Triumph units were exported to 50 countries, the company said. The company also aims to increase Triumph showrooms in India from 100 to 150 in the coming months.

 

On the despatches of electric scooters, the company said Chetak volumes have doubled on year on account of an increase in showroom count and the introduction of lower priced variant of Chetak. In the two-wheeler segment, Bajaj Auto currently offers Pulsar, Avenger, Platina, CT, and Dominar-branded motorcycles. It also manufactures and sells KTM, Husqvarna, and Triumph products. In the electric scooter space, it offers Premium and Urbane variants of Chetak.

 

Responding to queries on demand for a recently launched compressed natural gas-powered motorcycle, Sharma said, the company had received 4,200 bookings till Jul 15, with 90% of bookings coming from Maharashtra and Gujarat. The CNG motorcycle, 'Freedom 125', comes with a 125cc engine at a starting price of 95,000 rupees, ex-showroom Delhi.

 

Compared to electric two-wheelers, CNG motorcycles allow customers to travel longer distances and halve operational costs. Going forward, the company may launch higher engine capacity variants of CNG motorcycle. "Freedom is actually a portfolio brand and it's not just a product brand," said Sharma.

On the commercial vehicles front, the company sold a total of 151,139 units in Apr-Jun, 9% more than its sales in the year-ago period. Its domestic volumes rose 10% on year to 108,124 units. In comparison, exports grew by 9% on year to 43,015 units.

 

Bajaj Auto plans capital expenditure of 7-8 bln rupees in 2024-25 (Apr-Mar). "A large part of that will primarily go towards the commissioning of our new electric three-wheeler facility and other capabilities that we are building up essentially for electric segment," Bajaj Auto's Chief Financial Officer Dinesh Thapar said.

 

On the National Stock Exchange, shares of Bajaj Auto closed 0.5% higher at 9,718.35 rupees today.

 

Edited by Ashish Shirke

 

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