Bajaj Auto will continue to maintain margins at the current levels even though it has scaled up the electric vehicle (EV) business with the Chetak portfolio, said the management in its Q4FY24 earnings conference call.
Operating margins for Bajaj Auto stood at 19.7 percent, up 180 basis points year-on-year (YoY) in Q4FY24.
"We continue to dynamically manage margins across the portfolio as we have done for the last two years. And we continue to scale up Chetak and grow it competitively, while looking to hold margin at the levels we currently are," said the management.
The 180 basis points improvement in margins was a result of price versus cost dynamics, favourable dollar realisation, better product mix, and operating leverage from increased revenue, the company's management said. All the three factors together have also made up for the drag in Chetak, said the company.
The company also said that despite challenges like high lithium ion pricing and early design-stage issues, it has managed cost pressures. Plus by selling a record 40,000 Chetak units in the current quarter, they've contained incremental cost drag through R&D-driven cost savings, said the company.
However, the management said that the Production Linked Incentive (PLI) scheme for electric two-wheelers isn't expected to immediately lead to profits at the unit level for the company. While it helps offset some costs, there's still work to be done on cost-cutting and finding cheaper suppliers to bridge the profitability gap, Bajaj Auto said.
On Chetak
The management said that over the past two years, Bajaj Auto has significantly increased Chetak's production from 3,000 to 12,000-14,000 units monthly, driving a sustainable margin growth. In the same period, enterprise margin had improved by 400 basis points to 20 percent, largely due to scaling up in Chetak.
Bajaj Auto reported a consolidated net profit of Rs 2,011.43 crore, up by 18 percent in Q4FY24. The company reported a revenue of Rs 11,249.8 crore for the January-March quarter this year, up by 30 percent from Rs 8,660 crore during the same period last year.
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