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Bajaj Auto Q3 net profit down 4.74% to Rs924 crore

Bajaj Auto’s total income fell 9% to Rs5,354.13 crore from Rs5,884.25 crore


Bajaj’s domestic sales fell 3% to 4.59 lakh units in the three months to December from a year ago. Photo: Mint
Bajaj’s domestic sales fell 3% to 4.59 lakh units in the three months to December from a year ago. Photo: Mint

Mumbai: Bajaj Auto Ltd, India’s second largest motorcycle maker, on Tuesday posted muted earnings for the three months to December as it sold fewer vehicles following the government’s demonetization move.

Net profit in the third quarter fell 4.74% to Rs924.6 crore from Rs970.61 crore a year ago. Total income fell 9% to Rs5,354.13 crore from Rs5,884.25 crore. Overall sales volume dropped nearly 10.49% to about 851,000 units.

The earnings, however, beat analysts’ estimates. A Bloomberg consensus of analysts had estimated net profit of Rs851 crore.

With a good monsoon season and the implementation of the Seventh Pay Commission, the motorcycle industry was expected to record healthy growth. However, post demonetization in November and December, domestic sales of motorcycles and commercial vehicles recorded a decline of 16% and 32%, respectively, the company said in a statement to the BSE.

Moreover the outlook remains muted. “It will take a few more months for sales to revive,” said S. Ravikumar, senior vice-president, business development, without providing a specific timeline.

Ravikumar is hoping the Union government’s budget will be consumption oriented, putting more money in the hands of the people. “All areas where demonetization is hit is clear, how the finance minister alleviates those areas would be interesting to see,” he said.

However, with the sales mix getting skewed and reflecting more urban purchases of high-end motorcycles, the company managed to maintain its operating profit margin at 22% from a year ago. Operating profit fell to Rs1,131 crore from Rs1,235 crore a year ago.

“The results are very good, ahead of our expectations,” said Nitesh Sharma, analyst autos and auto components, PhillipCapital (India) Pvt. Ltd. He said the operating profit margin was 80 bps ahead of his expectations as the company had managed its costs well in a difficult environment.

In the domestic market, Bajaj introduced the Dominar 400 motorcycle in the October-December quarter. Its market share was 18.5% in the third quarter of the fiscal year, up from 17.4% a year ago.

Bajaj’s domestic sales fell 3% to 459,000 units in the three months to December from a year ago.

Bajaj Auto’s shares closed at Rs2837.75, up 0.44%, on BSE, while the benchmark Sensex index was down 0.70% at 27,655.96 points.

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