Bajaj Auto Q2 Preview: Revenue may rise 23% on strong volumes, rich product mix

The Bajaj Auto stock has rallied over 30 percent in the past six months.

Pune-headquartered Bajaj Auto Limited is set to release its earnings report for the second fiscal quarter of FY25 on October 16. An increase in volumes and a diversified product mix are expected to boost the company's sales to double-digit growth rates on a yearly basis.

According to a Moneycontrol poll of eight brokerage firms, the Triumph maker is anticipated to record a 23 percent year-on-year increase in revenue, reaching Rs 13,266 crore. Net profit is projected to surge 21 percent to Rs 2,227 crore from Rs 1,836 crore in the same quarter of the previous fiscal year.

Earnings estimates from analysts polled by Moneycontrol are in a narrow range, indicating that any positive or negative surprises could trigger a sharp reaction in the stock price.

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What factors are driving Bajaj Auto's earnings?

Steady demand: Two-wheeler volumes saw a 16 percent year-on-year increase, driven by a mild rise in average selling prices (ASPs) due to a richer product mix. This includes the expansion of premium two-wheeler segments, growth in exports, and price hikes during the year.

Rich product mix: Bajaj Auto, over the past year, has had a series of launches, which brokerages predict are also key growth drivers in the coming quarters. For instance, in May 2024, it launched the biggest Pulsar. The mix improvement in the two-wheeler segment and stable growth in the three-wheeler business are expected to be slightly offset by growth in the electric vehicle (EV) business.

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"Mild increase in ASPs or average selling price on account of richer product mix - premium 2W segments expansion, exports growth and, price increases taken during the year will contribute to the rise in revenue," Axis Securities, said in a note.

Margins to improve: The EBITDA margin is expected to improve by around 52 basis points year-on-year, driven by a richer product mix, operating leverage, and cost control measures. The expansion will also benefit from better net pricing.

“2W listed OEM volume grew by 11.2 percent YoY during Q2FY25 owing to the anticipated festive period and rural demand. The momentum is expected to continue in the upcoming quarters because of a good monsoon and wedding days in consistent months, which shall translate into a healthy demand moment,” Prabhudas Lilladher said in its Q2 preview note.

What to look out for in the quarterly show?

The demand outlook in domestic and overseas markets and CNG / E-mobility initiatives are key factors to watch out for. Furthermore, another key thing to track is the launch pipeline, progress of E-three wheelers, and raw material prices.

Bajaj Auto shares closed at Rs 11,921, higher by 0.2 percent from the last close. The Bajaj Auto stock has rallied over 30 percent in the past six months.

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