Bajaj Auto beats forecasts, posts net profit of Rs4.03 bn

Bajaj Auto beats forecasts, posts net profit of Rs4.03 bn

Mumbai: Bajaj Auto said on Thursday its net profit more than doubled in the September quarter, beating forecasts, and India’s second-largest motorcycle maker said it saw strong sales growth in the next six months.

Though rising raw material prices would push up input costs in coming quarters, Bajaj said this would be partly offset by higher volumes due to new launches.

“I think their targets are achievable as their volumes will be driven by the 100cc Discover and the Pulsar, which is getting good traction," said Umesh Karne, auto analyst with Brics Securities.

“However, margins might come under some pressure due to higher raw material costs. After the third quarter, they will have to re-negotiate their contracts," Karne said.

Managing director Rajiv Bajaj said the company sold 686,727 vehicles in July-Sept, its fiscal second quarter, and expected this to rise to about 700,000 vehicles in the December quarter.

In comparison, Bajaj’s statement showed it sold 934,017 vehicles, including 3-wheelers, between October 2008 and March 2009, when sales suffered as the Indian economy was hit harder than expected by the global slowdown.

“We will have the full effect of the Discover launch only in the second half of the year... Year-on-year we expect a 50% growth in volumes in the second half," Bajaj told CNBC TV18.

Bajaj Auto said more than 160,000 Discover motorcycles had been sold since it was launched in July, and said upgrades to some existing brands, such as the flagship Pulsar range, also boosted volumes.

For the September quarter, the company reported a net profit of Rs4.03 billion ($88 million), up from Rs1.85 billion a year earlier. Sales rose 15.4% to Rs27.93 billion.

A Reuters poll of 11 brokerages had forecast net profit at Rs3.81 billion.

Bajaj Auto’s profit margins improved with increased sales of its higher-end motorcycles. Its operating margin was 22% during the quarter compared with 13.6% a year ago.

The company exported 224,334 vehicles in July-September and said it expected to exceed an earlier target of 800,000 sales in 2009/10.

Its cash and cash equivalents stood at Rs16.52 billion at the end of the quarter, up from Rs9.33 billion on 1 April, it said.

Shares in Bajaj Auto, which has a market value of about $5 billion, ended down 3.4% at a one-week low of Rs1,554 in a Mumbai market that fell 0.2%.

The stock has risen nearly 4 times in 2009, outperforming a 78% rise in the main index.