Bajaj Auto reports highest-ever quarterly revenue and profit as domestic demand, exports recover

Bajaj Auto reports highest-ever quarterly revenue and profit as domestic demand, exports recover

Mumbai: Two- and three-wheeler major Bajaj Auto beat the street estimates to report its highest-ever quarterly revenue and profit during the October-December period on the back of sharp demand recovery, especially in exports, and higher consumer preference for it high-margin premium vehicles.

The company reported a standalone profit of Rs 1,556 crore for the quarter, a year-on-year growth of 23%. Analysts tracked by Bloomberg had a consensus estimate of Rs 1,373 crore.

Revenue was up 17% year-on-year to Rs 8910 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) improved by 27% to Rs 1,730 crore while Ebitda margin improved by 152 basis points to 19.4%.

The stock of Bajaj Auto closed 2.71% higher at Rs 3,735.9 on the BSE on Thursday against a 0.34% decline in the benchmark Sensex.

Reviewing the earnings, Rakesh Sharma, executive director at Bajaj Auto told ET that it was a good profile of volume, exports and revenue growth despite a very difficult quarter.

“Despite supply chain disruption created due to Covid-19, we have managed our operation in a robust fashion. The two major highlights are strong exports performance, wherein the company has gained share in many of the key markets and second is sustained demand for 125cc motorcycles and other higher-priced models in the domestic market,” he added.

Once the high margin three-wheeler business starts recovering the company expects that it will also add to the margin profile. The domestic three-wheeler market was at just 40% of pre-Covid sales levels while exports had recovered to about 75%, Sharma said.

The biggest headwind that the company was facing was on the cost side with commodity prices rising sharply over the last quarter.

“While we have passed on some portion of the cost increase to the end consumer, we may extend some more over a period of time. But that will depend on the demand recovery, which is still very fragile,” added Sharma.

For Bajaj Auto, the African market has already crossed pre-Covid levels and it was reaching new peaks and Latin American markets were back to 90% of pre-Covid levels. Overall, exports were at 90-95% of pre-Covid levels.

The company was dealing with supply chain challenges on two fronts – container shortage and lack of parts availability.

About 10-15% production was impacted during the quarter due to parts shortage, largely on the high-margin premium-end of the portfolio.

“Despite the production impact, we registered 9% growth in volume. It is actually not a loss of business, it is a deferral of business we are seeing, a similar impact is expected in Q4, the situation will take about April to May to resolve,” added Sharma.

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