Bajaj Auto Q3 PAT seen up 23% at Rs 819 cr

Bajaj Auto, country's second largest two-wheeler maker, is likely to post a profit after tax of Rs 819 crore in the third quarter of FY12, a growth of 23% as compared to Rs 667 crore in the corresponding quarter of last fiscal.

Revenues are seen going up by 20% to Rs 5,032 crore from Rs 4,177 crore during the same period.

Operating profit margin is expected to be at 20.6% in the quarter ended December FY12 versus 20.3% in a year ago quarter and 20% in the previous quarter.

On quarter-on-quarter basis, company's revenues are likely to go down 4.5% while profit after tax is seen going up by 13%. In the July-September quarter, results were strong but profit was slightly lower than expected due to MTM forex loss of Rs 95 crore.

For the 2-wheeler sector

* Signs of slowdown seen in volumes, demand momentum has been impacted post festive period
* This quarter, although commodity pressures have eased, (rubber down 33% YoY, aluminium down 21% YoY) it will reflect on margins with a lag 
* Thus performance will depend more on volume performance and price increases taken by the company
* BAL will report sequential margin growth and strong profit bump up due to
1) Good volume growth
2) Price increases taken by BAL in October 2011 in both domestic and export markets

For Bajaj Auto:

* Although volumes grew at healthy 13.6%, most of it came courtesy exports (28.4% growth) while domestic demand is still lacklustre, up only 6.8% YoY.

* Margins to improve due to high exports (Increase in OPM given sharp rupee depreciation, INR for Q3 at Rs 51 to the dollar vs Rs 47.8 in 2Q), stable raw material prices and price hikes.

* From 1st October, 2011, DEPB was replaced by Duty Drawback, benefit reduced from 9 to 5.5%.

* Bajaj hiked prices by 3.5% in all export markets to compensate for this benefit reduction, even in domestic market, Bajaj Auto increased prices by Rs 500-1,000 per model from Oct 2011

* Other operating income is expected to drop 27% QoQ due to the lower export benefits

* Expect export realisations to increase 5.1% QoQ while domestic realisations to increase 1.2% QoQ due to the price hikes undertaken

* Interest and depreciation charge to normalise from this quarter (It had reported higher one-off interest charge of Rs 20 crore and higher depreciation of Rs 9 crore in 2Q). 

* Raw material cost remain stable

Volume growth Q3FY12 YoY

* Total sales up 13.6% (down 7.6% QoQ) at 10.75 lakh units Vs 9.46 lakh YoY
* Motorcycles up 12.9% at 9.46 lakh units Vs 8.38 lakh
* 3-Wheeler sales up 18.8% at 1.28 lakh units Vs 1.08 lakh
* Exports up 28.4% at 3.80 lakh units Vs 2.96 lakh