Shares of India’s major auto-manufacturer Bajaj Auto zoomed on Friday afternoon to end 3% higher on BSE, after the firm’s Q1 results beat street estimates. Bajaj Auto shares closed 3% higher at Rs 2,619.40 on BSE. The firm’s net profit rose nearly 1% on-year to Rs 1,125.70 crore for the quarter under review. A Bloomberg poll had estimated net profit of Rs 1,080-crore. Bajaj Auto’s revenue increased 3.8% on-year to Rs 7,755.8 crore against the analysts’ estimate of Rs 7,515 crore.
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Taking stock of the reported results, brokerage firm Reliance Securities said that the company has quarterly performance in line with expectations, which was muted amid margin pressure. “Looking ahead, we expect BAL to face similar margin pressure on account of slump in domestic as well as exports three wheeler segments, intensifying competitive environment in domestic two wheeler space and lower exports growth,” Reliance Securities said in a report. We believe exports cushion would not be sufficient for margin expansion for Bajaj Auto Ltd, noted Reliance Securities.
In the quarter, Bajaj Auto recorded the highest ever exports of 5,50,021 units. In the commercial vehicles segment, the firm recorded sales of over 86,000 units for April-June period and continues to maintain its dominance
with market share of 57.1 per cent. The firm’s (EBITDA) earnings before interest, tax, depreciation and amortisation decreased by 10.5% to Rs 1,198 crore—in line with the consensus estimate of Rs 1,180 crore. Operating margin saw a contraction of 250 bps to 15.5% in the quarter gone by. “Bajaj Auto delivered broadly in line Operational performance in 1QFY20, with EBIDTA coming in line with our estimates at Rs 11.98 billion (Our Est is Rs 11.9 billion), noted Reliance Securities. Its EBIDTA margins of 15.4% (Our est was 15.7%) contracted 110bps QoQ and 250bps YoY, despite volume growth on YoY and QoQ basis, said the brokerage firm.