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Bajaj Auto Q3 net profit jumps 15%: Here are highlights of analyst call

Overall demand scenario has not picked up significantly, though last week of January saw some uptick in sales, largely attributed to pre-buying, Bajaj Auto management said.

January 31, 2020 / 04:22 PM IST
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Leading two-wheeler maker Bajaj Auto beat Street estimates on January 30 to report nearly 15 percent year-on-year (YoY) jump in net profit to Rs 1,262 crore in the December quarter. A CNBC-TV18 poll had estimated the number at Rs 1,191 crore.

The company’s revenue, however, fell short of the estimates, as revenue from operations inched up 3 percent YoY to Rs 7,640 crore against a CNBC-TV18 poll estimate of Rs 7,747 crore. The company reported a revenue of Rs 7,436 in the December quarter of FY19.

EBITDA improved 13 percent YoY to Rs 1,406 crore in December quarter against Rs 1,239 crore in the previous year's same quarter. EBITDA margin climbed to 18.4 percent in Q3FY20 against 16.7 in Q3FY19, the company said in a BSE filing.

Here are highlights of Bajaj Auto's earnings call, collated by Narnolia Financial Advisors:

According to the Bajaj Auto management, the overall demand scenario has not picked up significantly though last week of January saw some uptick in sales, largely due to pre-buying.

Demand will be impacted for a couple of quarters after implementation of BS-VI. The profitability of the BS-VI products will be same as BS-IV. The BS-VI variant of CT100 model is priced 15-18 percent higher than BS-IV models.

The company will move all its products to BS-VI by middle of February. To eliminate cost the company will offer electronic injection technology with BS-VI in the entry segment motorcycles in place of fuel injection. The fuel injection technology is largely used in Pulsar and KTM brands, it said.

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Bajaj Auto witnessed strong growth in 125cc segment as compared to 150cc segment. The margin expansion is largely attributed to higher export contribution, product innovation and upgradation, the management said.

On the export front, growth is driven by African markets. Bangladesh is facing some regulatory issues while Sri Lanka and Nepal continue to be in the negative zone.

LATAM has grown by 37 percent YoY in Q3FY20 largely because of low base. On a full year basis, this market also seems flat.

The management said the company has started exporting 3,000-4,000 3-wheelers to Egypt from January. The company created 16 new markets for 3-wheelers.

The 3-wheeler cargo segment recorded a growth of 11 percent YoY as against a decline of 3 percent YoY for the industry and the market share stands at 26 percent.

The 3-wheeler cargo segment will be the biggest beneficiary of BS-VI transition, as most of the smaller 4-wheeler products may go out of the system (sharp price increases).

The company will expand the Chetak portfolio. Currently 17 dealerships are giving test rides across the country. Dealer inventory stands at five weeks.

KTM volumes declined 15 percent YoY to 46,210 units in Q3FY20. Revenue declined by 10 percent YoY to Euro 323 million while PAT declined by 47 percent YoY to Euro 16 million in Q3FY20. The proportionate profit to Bajaj Auto Limited is Euro 7.7 million (Rs 61 crore) in Q3FY20, the management said.

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first published: Jan 31, 2020 04:22 pm