Bajaj Auto may report double-digit rise in profit, revenue growth in Q3

Bajaj Auto is expected to report decent numbers when it comes out with its December quarter results today. According to analysts, single digit decline in volumes and benign raw material costs should help Bajaj Auto report slightly higher revenue and profit growth in double digits. For Bajaj Auto, total volumes for the quarter came in at 12 lakh units, down 4.6 per cent on a year-on-year (YoY) basis with two-wheeler (2-W) volumes down 5 per cent YoY to 10.3 lakh units and three-wheeler (3-W) volumes down 3 per cent YoY at 1.75 lakh units.

In the corresponding year-ago quarter, Bajaj Auto had reported Rs 7,409.4 crore as revenue and profit of Rs 1,101.9 crore.

On the bourses, Bajaj Auto outperformed the benchmarks by surging 9.45 per cent in the October-December period as compared to the S&P BSE Sensex's 7.69 per cent gain.

Here's what leading brokerages expect from Bajaj Auto's Q3FY20 results:

Reliance Securities

Analysts at Reliance Securities say that the positive impact of healthy exports coupled with favourable exchange rate would aid profitability, while discounts on domestic 2Ws may lower the benefit to some extent. As a result, Bajaj Auto's revenue is likely to grow 7.3 per cent year-on-year (YoY) to Rs 7,950.3 crore while profit after tax (PAT) may jump 19.3 per cent YoY to Rs 1,314.8 crore. A positive geographical mix could aid the company on the operational front and hence the brokerage expects margin to 140bps YoY to 17 per cent from previous year quarters 15.6 per cent while Ebitda is seen at Rs 1351.2 cr, up 16.9 per cent YoY from previous year quarter's Rs 1156.1 cr.

Prabhudas Lilladher

The brokerage expects realization to de-grow by 2 per cent on a QoQ basis, led by unfavorable product mix (lower contribution from premium motorcycles and marginal decline in 3w contribution). As a result, revenue growth on a QoQ basis is expected to remain flat. Although, on a YoY basis, revenues might be up 4.5 per cent to Rs 7739.1 crore while PAT may grow 12.1 per cent YoY to Rs 1,235.6 crore. With favorable currency movement and RM cost to remain benign we expect margins to inch-up 120bps YoY at 16.8 per cent.

ICICI Securities
 

ICICI Securities sees net sales in Q3FY20 at Rs 7,646 crore, up 3.2 per cent YoY and PAT at Rs 1,160.8 crore, up 5.3 per cent YoY growth. EBITDA is likely to come in at Rs 1,298.7 crore, up 12.3 per cent YoY and EBITDA margins are seen at 17 per cent (up 140 bps YoY & 40 bps QoQ) respectively.

Kotak Securities 

Analysts at Kotak Securities expect Bajaj Auto's Q3 revenues to increase by 5 per cent YoY to Rs 7,810 crore, led by 9 per cent increase in ASPs due to price increase taken by the company in select models and 5 per cent yoy decline in volumes. Unlike the other brokerages though, Kotak Securities sees a slight dip in Bajaj Auto's profit and pegs Q3FY20 PAT at Rs 1,097.7 crore, down 0.4 per cent on a year-on-year basis. 

"We expect EBITDA margin to decline by 95 bps on a yoy basis in 3QFY20 largely led by negative operating leverage and increase in discounting in the domestic economy motorcycle segment. And, Ebitda is seen at Rs 1,144.6 crore, down 1 per cent YoY.