Bajaj Auto
The market was apparently happy with the Q1 numbers of Bajaj Auto, celebrating with a substantial gain. Beating all estimates, the company posted a 3% (YoY) rise in net profut at Rs.738 crore. This figure would have been much higher but for the Rs.96 crore forex loss . The growth in sales was muted, less than 1% growth at Rs.4911 crore. Almost all estimates were muted and when the company met these too, obviously the market felt happy. But if one ignores the estimates and looks at the numbers purely from an operational perspective, there are clear signs of stress. This reflects the state of the sector.
What did come to the rescue of the company was the falling rupee. Export volumes were down 13% but the weak rupee helped post much better returns. And the company in a Press Release has stated that given the current position of its hedged contracts, a further benefit on account of depreciating rupee would accrue to the company in the coming quarters. Its big winner, its EBIDTA margin, one of the highest in the sector, was once again above 20% at 21.3%, up from 19.2% (QoQ) and 18.9% (YoY). Its market share for the quarter was at 23%, lower from 24% a year ago. The labour strike at its Chakan plant, which started on 25th June, continues. The workers have demanded issue of 500 shares of Bajaj Auto per worker at Re.1/share and this, the management has firmly refused.
Looking ahead, the aim of the company is to maintain EBIDTA margins at around 20%. In the domestic market, it expects 10-12% increase in unit sales of 3-wheelers. It plans to a new version of Discover every 6-8 weeks and two of these are expected to be high end. The game changer will be the launch of its Re60 which is expected to shake up the automobile sector.