Bajaj Auto’s PAT rises 23% to Rs 1,556 crore

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January 22, 2021 9:37 AM

The domestic CV business remains impacted due to inadequate demand for short-distance mobility but the firm is working on strategy to bring some innovative financing solutions to this market, Ray said.

bajaj auto december quarter financial performanceDomestic two-wheelers continued to grow on the back of robust demand for Pulsar, Dominar, KTM and Husqvarna, the company said.

Bajaj Auto on Thursday reported its highest-ever profit and turnover during the December quarter (Q3). The company’s standalone net profit went up by 23% year-on-year to Rs 1,556.28 crore, while revenues rose 17% to Rs 8,730.10 crore during the quarter.

Bajaj Auto’s operating margin in Q3 was at 19.8% compared to 18.3% in the year-ago period. The improvement in margins was driven by higher operating leverage and better product mix, the company said. However, these margins could get impacted during the last quarter of FY21 as steel and aluminium costs had gone up and they would not be able to pass this onto customers, Bajaj Auto CFO Soumen Ray said.

During the December quarter, the firm had managed to pass on the additiona l2% cost to customers after the government stopped the export incentive schemes, Ray said. “But going forward, passing on rising cost to customers was a big concern and margins could take a hit.” He also expected some of the costs that were kept in check during 2020 to return as business grows and gets back to normal.

The company said it had posted its highest-ever turnover during the December quarter and for the first time exceeded the Rs 9,000-crore mark to reach Rs 9,279 crore, a rise of 16%. Revenue from consolidated operations was up 17% at Rs 8,910 crore while consolidated profit after tax was Rs 1,716 crore.

Bajaj Auto’s CFO, Soumen Ray, said that there was a shift in the market towards premiumisation and this as well as growth in the export markets contributed to profit and margins. The Pulsar range of bikes sold over 4,20,000 units in domestic and export markets. Customers were moving from the 100cc and 110cc to the Pulsar 125 bikes, which had higher margins, Ray said.

Bajaj achieved its highest-ever exports of 6,87,000 units during the quarter. This growth was despite shortage of containers and the company could have achieved even more substantial growth in the export markets, Ray said. Export revenues during the quarter was at Rs 4,082 crore.

Bajaj has also expanded its market share in the domestic motorcycle market to 18.6% during the December 2020 quarter from 17.5% in the September quarter.

Domestic two-wheelers continued to grow on the back of robust demand for Pulsar, Dominar, KTM and Husqvarna, the company said. Pulsar 125 witnessed strong traction with sales growing by 32% to 1,64,000 units and the Pulsar 125 market share in its segment had grown to 22.8% during the December quarter. Pulsar 125 is now contributing around 10% to 15% to the revenues, Ray said.

The domestic CV business remains impacted due to inadequate demand for short-distance mobility but the firm is working on strategy to bring some innovative financing solutions to this market, Ray said.

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