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Informist, Tuesday, May 27, 2025

 

By Narayana Krishna

 

HYDERABAD - Low volume growth and an adverse product mix are likely to weigh on Bajaj Auto Ltd.'s March quarter earnings, limiting year-on-year growth in net profit and revenue to single digits and causing a sequential decline in its earnings as well, according to analysts.

 

The Pune-based two- and three-wheeler maker is expected to report a 4% on-year rise in its Jan-Mar net profit to INR 20.2 billion, with a similar quantum of fall on a sequential basis, according to an average of estimates from 15 brokerages. Analysts also expect revenue for the quarter to rise 4% on year to INR 119.4 billion, though it may fall 7% sequentially, according to the estimates.

 

For the bottom line, Axis Securities' estimate of INR 19.2 billion is the lowest, while Equirus Securities Pvt. Ltd.'s forecast of INR 23.8 billion is the highest. As for the top line, Equirus Securities' projection of INR 117.1 billion is the lowest and KR Choksey Research's INR 123.8 billion forecast is the highest.

 

Besides low on-year growth in despatches, a higher share of entry-level bikes, and higher exports are likely to influence Bajaj Auto's March quarter performance, according to analysts. While entry level bikes are sold at weaker margins, pricing and currency volatility stand to impact revenue from exports, thus affecting the overall earnings.

 

In the year-ago quarter, Bajaj Auto posted a net profit of INR 19.4 billion on revenue of INR 114.8 billion. The company recorded a 3% on-year growth in total sales volumes for the March quarter, while volumes fell 10% sequentially, analysts noted. Exports rose nearly 20% during the quarter. According to ICICI Securities, the company sold a total of 1.10 million units in Jan-Mar, up 3.2% on year but down 10% on quarter.

 

Axis Securities expects Bajaj Auto's total revenue to increase 3% on year, driven by a 3% rise in overall volumes and a slight decline in average selling price due to an inferior product mix. Equirus expects the average selling price to decline 1.3% on year due to the same reason.

 

Bajaj Auto manufactures a wide range of bikes, three-wheelers, and the electric scooter e-Chetak. Bajaj Auto exports to over 90 countries, with a large share going to Africa, Latin America, South Asia, and West Asia. Nigeria remains a significant market, representing a major portion of total exports. Exports account for nearly 40% of the company's total sales volumes, according to reports.

 

MARGIN STRESS

Most analysts expect Bajaj Auto's March quarter earnings before interest, tax, depreciation, and amortisation margin to decline due to a higher share of entry-level two-wheelers, e-scooters, and export volumes in the mix. Bajaj Auto's e-Chetak is competing with TVS Motor Co.'s i-Qube in the e-scooter space, which has led to lower pricing and margin pressure, according to analysts.

 

Axis Securities projects the company's March quarter EBITDA margin to decline by 17 basis points on year and 10 bps on quarter due to its product mix. Sequentially, Elara Securities projects a 20-bps margin contraction despite a better mix and favorable currency impact. However, some analysts believe contributions from the production-linked incentive scheme may partially offset the margin pressure for the quarter.

 

Analyst estimates for Bajaj Auto's March quarter EBITDA margin range between 20.0%–20.5%. The average of Jan–Mar EBITDA estimates from 13 brokerages is INR 23.8 billion. For the year-ago quarter, Bajaj Auto EBITDA margin was at 20.1%.

 

The company is scheduled to announce its March quarter earnings on Thursday. Market participants are closely tracking its commentary on demand outlook in both domestic and overseas markets.

 

On Tuesday, Bajaj Auto's shares ended at INR 8,963 on the National Stock Exchange, up 0.05% from its previous close. The stock has risen nearly 7% since the company announced its December quarter results on Jan. 28.

 

Following are the Jan-Mar earnings estimates for Bajaj Auto Ltd. based on reports from 15 brokerage firms in the descending order by the estimate of net profit:

 

Brokerage name	Net Sales	Net Profit	EBITDA
	--in million rupees--
Equirus Securities Pvt Ltd	1,17,053.00	23,762.00	19,928.00
KR Choksey Research	1,23,790.00	21,599.00	25,764.00
Nuvama Wealth Management Ltd	1,21,900.00	20,531.00	24,807.00
Prabhudas Lilladher Pvt Ltd	1,21,645.00	20,109.00	24,478.00
HSBC Global Research	1,19,320.00	19,957.00	23,387.00
Anand Rathi Share and Stock Brokers Ltd	1,22,191.00	19,920.00	--
Emkay Global Financial Services Ltd	1,17,051.00	19,898.00	23,352.00
Nomura Equity Research	1,18,322.00	19,859.00	23,971.00
Motilal Oswal Financial Services Ltd	1,18,912.00	19,848.00	23,754.00
JM Financial Institutional Securities Pvt Ltd	1,19,048.00	19,775.00	24,267.00
ICICI Securities Ltd	1,18,817.00	19,661.00	23,745.00
Elara Securities (India) Pvt Ltd	1,17,854.00	19,645.00	23,543.00
HDFC Securities Ltd	1,18,969.00	19,644.00	--
Kotak Institutional Equities	1,18,225.00	19,304.00	24,244.00
Axis Securities Ltd	1,17,930.00	19,150.00	23,570.00
Average	1,19,401.80	20,177.47	23,754.62

 

  End.

 

US$1 = INR 85.33

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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