Bajaj net soars to Rs 682 cr

Bajaj Auto, India’s second largest two-wheeler manufacturer, today posted a 69 per cent rise in net profit for the second quarter, beating market expectaions. The festival season also pushed overall sales of two-wheelers.

The Pune-based company recorded a net profit of Rs 682 crore for the quarter ended September 30, compared to Rs 402 crore for the same quarter last year. Financial analysts tracking the company had estimated the profit to be in the region of Rs 630-650 crore.

Bajaj Auto sold 1,000,570 units of two and three wheelers in the domestic and export markets during the reporting period — a jump of 46 per cent against 686,727 units sold in the corresponding period last year.

The company’s net sales rose by 50 per cent to Rs 4,180 crore during the period, compared to Rs 2,793 crore last year. Bajaj markets nine motorcycle models and two three-wheeler models (goods and passenger) having multiple variants.

The company has improved its EBITDA margins to 20.7 per cent during the quarter, against 20 per cent reported in the first quarter. This is primarily due to high demand for price efficient bikes like Pulsar and Discover.

S Ravikumar, senior V-P (business development and assurance), Bajaj Auto said, “We are on course to sell four million units this financial year. Exports is expected to be at 1.1-1.2 million units. We should be able to log sales growth higher than the industry in the second half of the year.”

The four million sales figure will include 3.6 million two-wheelers and 400,000 three wheelers. Although the company has a market share of 34 per cent (close to its record high of 35 per cent four years ago), it is not expecting any substantial increase in the near future.

To accommodate further demand, the company is expanding its Pantnagar facility in Uttarakhand to 1.5 million per year by March 2011, from where it rolls out its Pulsar 135, Discover and Platina models. This will take its total capacity to five million units per annum across its plants.

Rating agency CARE has warned that the domestic growth seen so far in two-wheeler sales may not sustain in the second half and could dip to 13.5 per cent as compared to 27 per cent now.

This is not because of adverse conditions in the market but it because of last year’s high base effect when sales had surged. Bajaj, however, is expecting the industry to grow at 18-20 per cent, targeting its own growth to be higher than that.

Bajaj had raised prices of its products by two per cent in early October. Although, according to Ravikumar, the rise has completely off-set the increase of commodity prices till date, it can also withstand the estimated increase in input price over the next few months. He, however, ruled out any further possible price hike.