Bajaj Auto net up on bike sales growth

12% growth in motorbike sales, benign raw material prices drive performance; full-year profit up 30% to a record Rs 3,652 cr

Two-wheeler manufacturer Bajaj Auto reported a 29 per cent increase in net profit for the quarter ended March 31, 2016, riding on a 12 per cent growth in motorcycle sales and benign raw material prices. The firm’s profit jumped 30 per cent to a record Rs 3,652 crore.

Net sales for the quarter rose 15 per cent to Rs 5,304 crore, driven by a 12 per cent rise in sales of two-wheelers and a nine per cent growth in three-wheeler sales. Earnings before interest, taxes, depreciation and taxes (Ebitda) margin for the quarter was 23.1 per cent against 19.4 per cent in the year-ago quarter. Reacting to the results, the firm’s stock price rose 3.96 per cent to Rs 2,478.85 on the BSE on Wednesday. The BSE Sensex also gained 2.28 per cent.

Net sales for the full year rose 5.4 per cent to Rs 22,253 crore, helped by a 7.24 per cent increase in two-wheeler sales to 1.89 million units in the domestic market even though exports declined four per cent to 1.45 million units. Ebitda margin for the year also improved to 22.1 per cent against 20.3 per cent in the previous year.

The company expects to maintain a margin of about 20 per cent in FY17. “Material prices should largely be under control this year. We will have the full-year benefit of Avengers and V this year. The exchange rate of 67.5/rupee is also positive,” said S Ravikumar, president of business development at Bajaj Auto.

Exports, which bring 40 per cent of the revenue to the country’s largest two-wheeler exporter, could be a pain. “We have to be watchful. There is volatility in export markets due to macroeconomic issues. Oil-producing nations are impacted due to low crude oil prices. Then there is the problem of dollar availability. Everything is out of our control,” Ravikumar added.

The positive factor could be a further improvement in the domestic market share. Ravikumar said the company had a 20 per cent share in the domestic market as on March 31 and is hopeful of increasing it to 24-25 per cent by March 2017.

The company plans to bring a refreshed version of its two motorcycles - Pulsar and Platina in the July-September 2016 quarter.