Bajaj Auto surges up to 5% on better-than-expected Q1 net profit

Shares of Bajaj Auto moved higher by 5 per cent to Rs 2,680, recovering 7 per cent from intra-day low on the BSE after the company reported a better-than-expected net profit for the quarter ended June 2019 (Q1FY20).

The stock had hit a low of Rs 2,506 in early morning deal before the announcement of results. Eventually, shares settled at Rs 2,619.40 apiece, up around 3 per cent 

Bajaj Auto reported a flat consolidated net profit at Rs 1,126 crore in Q1FY20, against Rs 1,115 crore in Q1FY19. Operational revenues during the quarter grew 4 per cent to Rs 7,756 crore from Rs 7,465 crore in the year-ago quarter.

Earnings before interest, tax, depreciation and amortisation (ebitda) margins contracted 220 basis points (bps) to 16.1 per cent from 18.3 per cent.

Analysts at Motilal Oswal Financial Services (MOFSL) had predicted a 2 per cent year on year (YoY) growth in Bajaj Auto's revenue to Rs 7,573 crore and 2.8 per cent decline in net profit at Rs 1,084 crore. Phillip Capital had pegged Bajaj Auto's fall in margins at 190 bps YoY to 15.4 per cent due to inferior product mix and higher discounting in the domestic two-wheeler portfolio.

In domestic motorcycle the company recorded a growth of 3 per cent over Q1FY19 as against an industry de-growth of 9 per cent. Overall share in the domestic motorcycle market at 18.3 per cent as against 16.3 per cent in Q1FY19.