Bajaj, TVS vroom to record profits in Q3

Bajaj Auto's revenue from operations grows 30% YoY to 12,114 crore in Q3FY24, with profits up 37% YoY to 2,042 crore and Ebitda margins at 20.1%. TVS Motor's revenue rises 26% YoY to 8,245 crore, with net profit up 68% to 593.35 crore.

Alisha Sachdev
First Published24 Jan 2024, 10:44 PM IST
For TVS Motor Company, total sales increased 25% to 11 lakh units in the three-month period ended 31 December.
For TVS Motor Company, total sales increased 25% to 11 lakh units in the three-month period ended 31 December.

New Delhi: Bajaj Auto and TVS Motor Company recorded record-high revenues, profits and operating margins in the quarter ended 31 December, buoyed by robust festive purchases and a revival in rural demand, financial statements filed by the two-wheeler makers with the exchanges showed on Wednesday.

Both the original equipment manufacturers (OEMs) saw record profits despite a surge in sales of their electric two-wheelers that typically have low margins.

This points to improving cost structures in the electric segment and an improved domestic mix favouring more premium motorcycles offsetting lower EV margins.

For Bajaj Auto, revenue from operations grew 30% on year to 12,114 crore in Q3FY24, with a handsome growth in the sales of the company’s best-selling brand in the 125cc and above segment, the Pulsar, driving profits up 37% year-on-year to 2,042 crore and Ebitda (earnings before interest, taxes, depreciation and amortization) margins to 20.1%, an improvement of 98 basis points over the third quarter last fiscal.

A hundred basis points make one percentage point.

For TVS Motor Company, revenue in the December quarter rose 26% on year to 8,245 crore, while its net profit grew 68% to 593.35 crore.

Its Ebitda margin rose to 11.2%, making December the third consecutive quarter of record-high operating income for the Chennai-based two-wheeler maker.

Total sales, including exports and three-wheelers, for Bajaj Auto were up 22% to 12 lakh units. For TVS Motor Company, total sales increased 25% to 11 lakh units in the three-month period ended 31 December.

While the festive season and marriage-season-related buying lifted sales in the entry-level segment of motorcycles and scooters in Q3, Bajaj Auto expects the category (of motorcycles in the under 110cc segment) to keep losing lustre in the future.

“A rising tide lifts all boats and so it has happened with the entry level (100cc and below). But it is a segment that will grow the least. Its share of the industry will continuously erode. That is the trend we are seeing,” Rakesh Sharma, executive director, Bajaj Auto, told Mint.

“It eroded faster during the Covid time because there the customer was more fragile and more vulnerable. Now some savings have come to that customer so it is showing growth, but the tendency is for people to upgrade to the Executive 100 cc, to upgrade to the 125 cc and then to the 150 cc. The bottom of the pyramid is going to grow the least,” he added.

The view was echoed by TVS Motor Company, which said the company will carefully watch whether the recent improvement it has seen in the moped segment from its rural markets is sustainable.

K.N. Radhakrishnan, chief executive officer, TVS Motor Company, said that rural regions have seen a minor improvement and higher growth potential is being observed in urban and semi-urban areas. The company believes that higher aspirational needs of these consumers would lead to better growth from premium segments (>125cc segment). However, Radhakrishnan said he expects the lift in rural sentiment observed during the Diwali season to continue well into the fourth quarter of FY24.

Bajaj Auto is now gearing up to ramp up its output of electric scooters to 15,000 units a month in the ongoing quarter, after surpassing 10,000 units in monthly sales in Q3, exiting 2023 with a share of 14% in the domestic electric two-wheeler market. “We are looking to hit the 15,000 mark in Q4. We have introduced new variants of the Chetak in the closing week of December which have been received very well and are seeing a healthy rate of bookings in January”, Sharma said.

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First Published:24 Jan 2024, 10:44 PM IST
HomeCompaniesCompany ResultsBajaj, TVS vroom to record profits in Q3

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