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Business News/ Companies / Company Results/  Bajaj Auto Q3 Results Preview: Net profit, revenue may rise over 30% YoY led by volume growth, rich product mix
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Bajaj Auto Q3 Results Preview: Net profit, revenue may rise over 30% YoY led by volume growth, rich product mix

Bajaj Auto Q3 Results Preview: The net profit of the auto OEM is expected to rise 33 per cent year-on-year (YoY) to ₹1,987 crore and revenue may rise 31 per cent to ₹12,258 crore, according to brokerage firms.

Bikes dispalyed at TCS Bajaj Auto Showroom in Faridabad. Photo by RajkumarPremium
Bikes dispalyed at TCS Bajaj Auto Showroom in Faridabad. Photo by Rajkumar

Bajaj Auto Q3 Results Preview: Bajaj Auto will announce its October-December quarter results for fiscal 2023-24 (Q3FY24) on Wednesday, January 24. The two and three-wheeler major is expected to report robust growth in net profit and revenue driven by volume growth, price hikes, and a better product mix in favour of premium vehicles, according to estimates by analysts and leading brokerage houses.

The net profit of the auto original equipment manufacturer (OEM) is expected to rise 33 per cent year-on-year (YoY) to 1,987 crore and revenue may rise 31 per cent to 12,258 crore. The surge is likely driven by a 22 per cent YoY growth in volumes and rise in average selling price (ASP) on rich product mix. 

Also Read: Bajaj Auto stock jumps nearly 6%, hits fresh record high as board approves 4,000-crore share buyback

The expansion of premium two-wheeler segment and greater number of three-wheelers have driven ASP in the December quarter, according to estimates by the brokerage firms. Earlier this month, Bajaj Auto's board approved a share buyback program amounting to 4,000 crore, with shares priced at 10,000 each, equivalent to 1.41 percent of Bajaj Auto's outstanding shares.

Bajaj Auto reported a 32 per cent YoY growth in sales volumes at 12,00,997 units in the December quarter. The company reported a total sales of 3,26,806 units in December 2023, registering a growth of 16 per cent from 2,81,514 units sold in December 2022. The domestic sales last month increased 28 per cent to 1,90,919 units from 1,48,583 units YoY. 

The auto OEM sold 1,58,370 units of two-wheeler in the domestic market, reporting a growth of 26 per cent from 1,25,553 units YoY. For the whole year 2023, the company’s total sales increased seven per cent to 32,82,357 units from 30,68,129 units in 2022. Bajaj Auto’s domestic wholesale in 2023 spiked 29 per cent to 20,57,393 vehicles from 15,91,594 vehicles sold in 2022. 

Bajaj Auto share price has rallied over 39.3 per cent in the past three months, while the stock is up 92.7 per cent in one year. On Tuesday, shares settled 0.33 per cent lower at 7,090.60 apiece on the BSE. Here's a summary of what each of the brokerage firm expects from Bajaj Auto's Q3 scorecard:

What brokerages expect from Bajaj Auto's Q3 scorecard:

Goldman Sach:

The global brokerage firm has revised its target price for Bajaj auto upwards by 14 per cent, following three per cent and 6.5 per cent upwards revision in FY25 and FY26 earnings estimate. A higher-than-expected volume sequentially, declining electric vehicle (EV) battery prices, ongoing benign raw material prices are amongst key reasons for them revising target prices and earnings estimates.

The slight rupee depreciation supporting export business profitability and recent price moderation on Pulsar 125/150 along with lower sequential export business mix are also favourable for the auto major's Q3 report card, according to the global brokerage house.
 

Motilal Oswal Financial Services:

The leading domestic brokerage said that Bajaj Auto's export volumes, despite declining three per cent YoY (and rising two per cent sequentially are showing a gradual recovery due to improvement in global macros. 

The festival season and the low base of last year (due to early festival inventory stocking in Q2) led two-wheeler domestic volumes to grow 44 per cent YoY, said Motilal Oswal. The auto major's margin is likely to expand 100 bp YoY majorly led by improved mix and operating leverage. 

‘’We have upgraded our target multiple to 18x from 16x to factor in the success of Triumph in the premium segment category and export recovery,'' said the brokerage on Bajaj Auto's stock.

 

Prabhudas Lilladher:

The domestic brokerage expects Bajaj Auto's revenue to grow by around 29 per cent YoY due to volume increment of 22 per cent YoY and a better mix leading to higher ASP. The total sales are likely to rise by 28.5 per cent YoY. The brokerage expects the net profit to rise 26 per cent YoY to 18,792 crore.

On the operating front, the auto major's earnings before interest, taxes, depreciation, and amortization (EBITDA) in the December quarter to decline by 50 basis points (bps) to 18.6 per cent YoY due to lower advertisement spends and operating leverage benefits. 

Also Read: Bajaj Auto December sales grow 16% YoY to 3.26 lakh units; two-wheeler sales up 15%


Axis Securities:

The brokerage expects Bajaj Auto's total revenues to increase by nearly 32 per cent YoY led by a 22 per cent YoY increase in volumes and eight-to-nine per cent YoY increase in ASPs on account of higher mix of the three-wheelers, premium two-wheeler segments expansion and price increases. 

The auto major's EBITDA margin is expected to improve by around 33 bps on a YoY basis (with a decline 38 bps sequentially) in the December quarter led by price hikes and operating leverage, partly offset by lower mix of three-wheelers, higher mix of the EV two-wheelers and entry-level motorcycle segments.

 

Equirus Securities:

Bajaj Auto's overall volumes increased by 24 per cent YoY and two per cent sequentially while ASPs are expected to change by eight per cent as against the preceding July-September quarter, according to the brokerage.

The auto major's total two-wheeler volumes changed by 22 per cent YoY and 18 per cent sequentially mainly due to better domestic sales. ‘’We expect EBITDA to change by 11 per cent sequentially and 33 per cent YoY due to better operating leverage,'' said the brokerage for Bajaj Auto's Q3 performance.

 

Phillip Capital:

The auto major's revenue is likely to grow 11 per cent sequentially led by a 14 per cent increase in volumes, partially negated by decline in realisations due to adverse product mix. The EBITDA margin is likely to decline 76 bps compared to the September quarter on adverse product mix due to lower exports and three-wheeler mix.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 24 Jan 2024, 06:13 AM IST
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