Bajaj Auto Q3 preview: 2W growth may aid revenue; PAT may rise up to 7% YoY

Bajaj Auto Q3 preview: Auto major Bajaj Auto will announce its Q3 results on Tuesday, January 28, 2025. The company’s Q3FY25 results are expected to show moderate growth, with analysts predicting a revenue increase in the range of 3.2 per cent to 6.9 per cent Y-o-Y. This growth is supported by production rises in two-wheelers (7 per cent), along with improved realisations due to premiumisation. 

 

Operating margins are expected to remain flat sequentially, as lower input and forex costs are offset by challenges in scale. 

 

Meanwhile, PAT is forecasted to grow up to 6.5 per cent Y-o-Y. 

 

While demand for two-wheelers and passenger vehicles saw a boost during the festive season, dealers report comfortable inventory levels. However, a shift in product mix and increased promotional activity may lead to margin contraction for some players in the auto sector.

 

On the bourses, Bajaj Auto shares settled 0.28 per cent lower at Rs 8380.35. In comparison, BSE Sensex closed 1.08 per cent lower at 75,366.17, on January 27, 2025. 

 

Considering these factors, brokerages are projecting the following for Bajaj Auto in Q3:

 

Anand Rathi

 

Anand Rathi expects a moderate growth in the 2W and PV segments, with a healthy 11 per cent Y-o-Y revenue growth for the covered companies. The growth is driven by production increases of 2Ws (~7 per cent), and PVs (~4 per cent), alongside better realisations from premiumisation. 

 

Operating margins are likely to remain flat Q-o-Q, as the positive effects of lower input and forex costs are offset by adverse scale impacts. 

 

Ebitda/PAT are expected to grow 6 per cent/9 per cent Y-o-Y, though limited by the slower performance of tyre companies due to higher input costs. On a Q-o-Q basis, Ebitda/PAT growth is expected to be 2 per cent/9 per cent. 

 

As a result, analysts predict a revenue of Rs 12,502.8 crore, up 3.2 per cent Y-o-Y; adjusted PAT at Rs 2,090.4 crore, up 2.4 per cent Y-o-Y; and an Ebitda margin of 20.1 per cent.

 

Elara Capital

 

Elara Capital forecasts a 13 per cent Y-o-Y and 5 per cent Q-o-Q revenue growth for their Auto OEM universe (excluding Tata Motors) in Q3FY25. This is driven by production growth across most segments (except PVs). 

 

After a strong festive season for 2Ws and solid PV retails in December (though aided by heightened discounts), dealer inventory levels are said to be at comfortable levels. However, 15 out of the 21 companies under Elara Capital's coverage are expected to see a Y-o-Y Ebitda margin drop, primarily due to demand peaking across most segments and commodity costs hitting their lowest point. 

 

OEMs in the 2W and PV segments are expected to show flat to slightly weaker model mixes on a Q-o-Q basis. 

 

Accordingly, Elara analysts predict Bajaj Auto to post a revenue of Rs 12,954.9 crore, up 6.9 per cent Y-o-Y; Ebitda at Rs 2,506.8 crore, up 3.2 per cent Y-o-Y; and recurring PAT at Rs 2,098.3 crore, up 2.8 per cent Y-o-Y.

 

Sharekhan 

 

Sharekhan anticipates a single-digit revenue growth for the automobile sector in Q3, with Ebitda margins expected to contract. This is largely due to a shift in the product mix in some cases, along with an increase in promotional offers to clear out inventory post-festive season. 

 

Thus, ShareKhan forecasts Bajaj Auto to post a revenue of Rs 12,659 crore, up 4.5 per cent Y-o-Y; PAT at Rs 2,175 crore, up 6.5 per cent Y-o-Y; and an Ebitda margin of 20 per cent Y-o-Y.