Results were marginally ahead of estimates on better margins due to tight control on costs. PAT beat was boosted by higher other income on account of mark-to-market of fixed maturity products because of fall in interest rates. Management believes that festive season is muted with single-digit growth for the motorcycle industry.
It expects H2 to be better for Bajaj than H1 because of new launches (Pulsar, VS400 and V cousin). On 3W, it expects to meet its target in the domestic market and continue outgrowing the industry on entry into the cargo space. Whilst not explicitly stated, management commentary seemed to suggest exports to Africa now are a medium-term issue.
It sees no improvement in the next six months and acknowledges that very high inflation is eating away at demand. It is trying to overcome this by entry into new markets. It is also planning another attempt at the ASEAN market, this time with the KTM brand. We reduce export volume forecasts but increase margin estimates on tight control on other expenditure; no change to EPS.
As per management, the motorcycle industry volume growth during the festive season has been in single digits and lacks euphoria. However, this was on expected lines for them as they were not expecting benefits of Pay Commission/strong monsoons to lead to strong volumes.