Feb 04, 2013, 06.21 PM | Source: CNBC-TV18

No concrete signs of sales pick-up yet, says Bajaj Auto MD

Two-wheeler sales remain sluggish and there are no concrete signs of a pick-up yet, Rajiv Bajaj, MD, Bajaj Auto said on Monday.

Moneycontrol Bureau

Two-wheeler sales remain sluggish and there are no concrete signs of a pick-up yet, Rajiv Bajaj, MD, Bajaj Auto said on Monday.

The India's second largest two-wheeler maker reported a 3 percent year-on-year rise in January sales at 3.48 lakh units. Motorcycle sales were up just 2 percent at 3.01 lakh units, while commercial vehicle sales rose 7 percent to 46,263 units. Exports were up 10 percent at 1.28 lakh units. The company said sales were higest ever for Jan.

Bajaj told CNBC-TV18 that there was some festive season spike in sales in Oct-Nov, but since mid Dec, the market has been flat and although there has been some growth over Dec-Jan, there is nothing to celebrate yet.

However, he is confident of the company achieving its target of 4.3 million (43 lakh) unit sales in the current financial year (FY2013).

Bajaj had said last month, that the company would miss its 5 million (50 lakh) sales target for the current fiscal, and would only likely sell around 43 lakh units.

The company is banking on new launches like the Discover 100T it launched recently to drive sales growth and help boost market share, which has flattened out at around 25 percent.   

Bajaj said that around 15,000 Discover 100Ts have so far been sold to distributors and the company is satisfied with the response the bike has got so far.

Bajaj Auto shares were up 1.2 percent at Rs 2,081 on NSE in morning trade.

Below is the edited transcript of Rajiv Bajaj interview to CNBC-TV18

Q: Your monthly numbers look a bit sluggish. Low single digit growth in most categories. Would you say that January has turned sluggish once again after the festive push?

A: I would say that there are probably two factors. One, no doubt the market is flat. Post-festive there is no pick up really, it was just little bit of a spike coming from the festive. Right from the middle of December the markets have been flat. I am personally happy it is not in the negative area, but there is no doubt that there is no significant growth.

So, I think that is one reason. The other reason is simply that sometimes we tend to follow the numbers too closely. If we were to take a step back we would see that December was a little too good. It was also a reflection of the fact that most manufacturers had little elbowroom in December to put some stock into the dealerships.

More specifically in December the billing was more than the secondary retail. In January, we have tempered that a bit. The billing is a little less than what we have retailed. So if we put the two months together we see that there is 5-7 percent growth. However, it is not much to celebrate.

Q: Post your numbers you indicated that the new target for the year could be 4.3 million units. Does that still stand or do you think it might be a bit softer than that?

A: No, I think we are good for that. We have finished the first 10 months with 3.6 million vehicles as opposed to a little more at the same time last year. This was, I think 3.67 million, so almost identical.

Our recent run rate has been about 350,000 units each month of both motorcycles and three wheelers, domestic and exports put together. So, if I were to assume that we remain in that zone for the next two months that would be another 700,000 vehicles in addition to the 3.6 million. That would be exactly 4.3 million.

Bajaj Auto stock price

On December 01, 2015, Bajaj Auto closed at Rs 2461.20, down Rs 20.35, or 0.82 percent. The 52-week high of the share was Rs 2659.20 and the 52-week low was Rs 1913.80.

The company's trailing 12-month (TTM) EPS was at Rs 118.56 per share as per the quarter ended September 2015. The stock's price-to-earnings (P/E) ratio was 20.76. The latest book value of the company is Rs 369.50 per share. At current value, the price-to-book value of the company is 6.66.

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