It’s been a rough ride but at the end of 2019-20, Bajaj Auto has reason to cheer; consolidated revenues at Rs 29,918.65 crore were a shade higher than those of rival Hero Motocorp’s at Rs 29,253.97 crore. The Pune-headquartered firm also managed to hold on to its operating margins which came in at a strong 17%. The ebitda per vehicle was higher at Rs 11,042 compared with Rs 10,345 in FY2019 despite sharp fall in volumes of 8.1%, a commendable achievement. This was helped by a price increase of 2-3% in the home market for both two and three wheelers in the March quarter. To be sure, Bajaj’s 10% compounded top line growth over the last decade has been helped by export realisations. Analysts at Kotak Institutional equities expect the company to gain both in the domestic as well as export geographies. Analysts believe that with an affordable range of bikes the company is well-positioned to take advantage of the demand. As Rakesh Sharma, ED, Bajaj Auto, pointed out, given the fear of contracting coronavirus infection the two-wheeler space could see a lot of action as commuters prefer personal mobility.
Nonetheless, 2020-21 will be a tough year and volumes could see a low double digit fall before picking up smartly in the two years thereafter. The company is expected to gain share from Chinese players in African markets as Chinese competition is quite fragmented with weaker balance sheet than that of Bajaj. Sharma said demand is picking in rural and semi-urban areas and operations have been ramped up with vendors resuming supplies, transport systems restored and dealerships re-opened. Bajaj Auto accounts for over 50% of the country’s two-wheeler and three-wheeler exports; with 15 million vehicles exported, it has earned over $13 billion of foreign exchange in the last decade.
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