Swaraj Baggonkar Moneycontrol News
The slide in Bajaj Auto's operating margins during the December quarter is a temporary blip and will be reversed in the coming quarters, top executives of the company have assured.
After posting a nine-year low operating margin of 15.6 percent, the Pune-based company said the margins should improve, riding on three specific reasons over the next six months.
Bajaj Auto's margin has traditionally been in the vicinity of 20 percent margin every quarter. During the December quarter of 2017, the company clocked a margin of 19.5 percent.
Kevin D’Sa, Bajaj's President (finance) said, “Quarter one and quarter two will see a forex gain of around Rs 75-80 crore that would increase our export margins by 1 percent. Platina 110 is doing very well than the loss-making CT100 and it is forming a bigger component in the bigger pie.”
Bajaj Auto posted Rs 1,220.77 crore net profit for the December quarter, a growth of 20 percent over Rs 1013.16 crore clocked in the same quarter last year. During the quarter, the loss-making CT100, Bajaj’s most affordable model, sold 181,000 units while the Platina sold 195,000 units.
“The M1 segment which is loss-making is actually improving and it is helping us break even. We have seen commodity prices softening with steel and aluminium prices coming off a bit. That is why margins should go up a bit in the fourth quarter but significantly better in the first quarter of next year,” added D’Sa.
The company launched new variants of its Pulsar bikes under the Neon series some weeks ago. Styling has been spruced up with new colour and graphic designs. While for the quarter the company sold 227,000 units of Pulsar and Avenger the Neon series is expected to boost demand in the coming weeks.
“Pulsar Neon series has unlocked a lot of demand. Volumes have gone up significantly after the introduction of Neon. We will probably close this month at 20 percent growth in retail demand. Platina 110 has become the lead with 25,000-30,000 units this month. Classic Pulsar 150 is doing 25,000 units a month,” added D’sa.
During the December quarter, Bajaj Auto posted 38 percent growth in domestic volumes at 6.44 lakh as against 4.66 lakh posted in the corresponding quarter last year.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
