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Bajaj Auto Q3 peview: Profit may grow over 16%; volume, ASP MAY boost revenue growth

Profit is expected to be supported by revenue and operating performance, while higher volumes and average selling price (ASPs) could boost topline during the quarter.

January 21, 2021 / 08:12 AM IST
 
 
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Two & three-wheeler maker Bajaj Auto is likely to register more than 16 percent year-on-year growth in standalone profit, revenue and operating profit for the quarter ended December 2020 led by festive demand.

Profit is expected to be supported by revenue and operating performance, while higher volumes and average selling price (ASPs) could boost topline during the quarter.

Volumes increased by 9 percent YoY in Q3 FY21 led by 26 percent YoY increase in export motorcycle volumes and 8 percent YoY increase in domestic motorcycle volumes, which were offset by 36 percent YoY decline in three-wheeler segment volumes.

"We expect revenues to increase by 19 percent YoY led by 9 percent YoY increase in volumes and 10 percent YoY increase in ASPs in Q3 FY21," said Kotak Institutional Equities which sees 18.6 percent YoY growth in profit.

According to Narnolia, Bajaj Auto is expected to record revenue growth of 16 percent YoY led by 16 percent volume growth in the 2-wheeler segment on the back of strong festive demand seen in the quarter. Realisation is also expected to improve by 8 percent YoY on the back of improved product mix.

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At the operating level, operating profit margin is likely to get impacted by higher raw material cost, though supported by cost reduction and better 2-wheeler mix.

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"We expect EBITDA to increase by 18 percent YoY led by 19 percent YoY increase in revenues and cost-reduction efforts, partly offset by raw material cost pressure and negative impact of the withdrawal of the export incentive scheme in Q3 FY21," said Kotak which sees margin falling 4 bps.

Emkay Global also said, "Despite the better scale, benign currency and cost reduction efforts, EBITDA margin is likely to contract on the adverse mix and higher input costs. Mix has turned adverse due to lower share of 3-wheeler."
Moneycontrol News
first published: Jan 21, 2021 08:12 am

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