Bajaj Auto Q1 net up 1 pct despite export slump

BAJAJ-AUTO-RESULTS:Bajaj Auto Q1 net up 1 pct despite export slump

Bajaj Auto Ltd , India's second-largest motorcycle maker, reported flat net profit for the June quarter, but saw its shares jump as its profit margin weathered a slump in exports of its lucrative commercial vehicles.

Shares in Bajaj turned positive and rose as much as 3.2 percent after the company said net profit during the quarter rose 1 percent to 7.18 billion rupees, and that its industry-topping profit margins had risen.

"The market was expecting margins to suffer, but they have stayed intact," said Umesh Karne, industry analyst at Brics Securities in Mumbai. "Exports are a worry, but the company expects them to improve by the end of the next quarter."

 

Net sales rose 4 percent to 47.14 billion rupees. Analysts, on average, had expected profit of 7.91 billion rupees, according to data from Thomson Reuters I/B/E/S.

The company's operating margin for the quarter stood at 19.4 percent, up from 19.1 percent a year previously.

Shares in Bajaj, valued at around $7.6 billion, were up 2.8 percent at 0728 GMT in a flat Mumbai market, the benchmark index's biggest percentage gainer. The stock was down as much as 1.4 percent before the results.

Bajaj, the world's biggest manufacturer of three-wheeled rickshaws used for passenger and goods transportation, said exports of the vehicles fell 41 percent in the quarter, hit by a tax hike in Sri Lanka and political instability in Egypt.

"Bajaj Auto, along with its distributor, has undertaken pro-active measures like rationalising the end-user cost of vehicles in Sri Lanka," the company said in a statement, adding that it expected sales to return to normal levels by September.

Sales of its motorcycles in India fell 1 percent during the first quarter of the fiscal year that began in April, against 6 percent growth in the overall market.

Bajaj and its local rivals Hero MotoCorp and TVS Motor are starting to come under pressure from Japanese manufacturers such as Honda Motor Co <7267.T>, as they ramp up activity in the fast-growing market.