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Bajaj Auto Q1 Preview: Double-digit decline seen in profit, but realisation may increase

According to Sharekhan, realisations are expected to increase 13 percent YoY driven by prices hikes due to BS6 transition.

July 22, 2020 / 08:45 AM IST
 
 
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Bajaj Auto is expected to see a steep fall in June quarter earnings due to a significant decline in volumes across segments, but realisation may increase on price hike and rupee depreciation.

According to brokerages, profit in Q1 FY21 could drop 44 percent which could be supported by higher other income and lower tax cost. Revenue during the quarter may decline around 60 percent compared to June quarter last year, while operating profit may drop over 66 percent YoY.

Bajaj Auto's sales volumes declined by 65 percent year-on-year to 4,43,000 units led by (1) 70 percent YoY decline in domestic bike volumes, (2) 74 percent YoY fall in three-wheeler volumes and (3) 55 percent decline in export two-wheeler volumes in Q1 FY21.

"We expect revenues to decline by 59 percent YoY led by 65 percent fall in volumes and 10 percent increase in average selling price due to the BS-VI transition in the domestic market," said Kotak Institutional Equities which sees profit falling 44 percent for the quarter YoY.

According to Sharekhan, realisations are expected to increase 13 percent YoY driven by prices hikes due to BS6 transition.

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Operating profit margin is expected to decline 260 bps YoY due to negative operating leverage, said the brokerage which expects EBITDA to decline by 67 percent.

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According to Kotak, operating profit margin may contract by 272 bps YoY and EBITDA may decline by 66 percent YoY due to steep decline in volumes in Q1FY21.

Bajaj Auto shares rallied 40 percent during June quarter but corrected 5.7 percent year-to-date.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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first published: Jul 22, 2020 08:45 am

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