Indian two-wheeler major Bajaj Auto reported its highest-ever profit in the October-December quarter on the back of pent up demand and a 9% jump in volume growth from last year.
It posted a consolidated net profit of 17.16 billion rupees (US$235 million) for the third quarter, up 29.7% from 13.22 billion rupees in the year-ago quarter. On a standalone basis, the net profit was 15.56 billion rupees ($213 million), up 23.4% from last year. Both figures were the company’s highest-ever outcomes in a single quarter.
It much higher than what the analysts had forecast. HDFC Securities had expected Bajaj Auto’s profit after tax to grow 8%, while Motilal Oswal and Kotak Securities had projected 10.2% and 18.6% increases in profits, respectively.
The company said its Ebitda (earnings before interest, tax, depreciation and amortization) margin expanded 150 basis points to 19.8%, driven by higher operating leverage and a better product mix.
Bajaj Auto’s sales from operations during the quarter rose 17% to 89.1 billion rupees ($1.22 billion), compared with 76.40 billion rupees last year. The company sold 1.3 million units during the quarter, including 619,000 units sold in the domestic markets, and its exports rose 22% to 687,000 units on the back of a rise in sales in African and Latin American markets. The company said its export sales were the highest ever despite a shortage of containers. In the year-ago quarter, it sold 1.2 million units.
However, Bajaj’s commercial vehicle sales continues to suffer due to low demand. The company’s commercial vehicle portfolio mainly comprises three-wheelers that are of low tonnage and used to ply passengers and goods over short distances. The lockdowns and travel restrictions across the country have taken a heavy toll on sales.
Bajaj Auto’s commercial vehicle sales declined 65% to 34,230 units this quarter, compared with 96,736 units last year. This lackluster performance impacted the company’s overall domestic vehicle sales, which fell 3% this quarter.
The company had sold 585,000 two-wheelers in the country during the third quarter, a growth of 8%. Its overall share in the domestic motorcycle market sequentially rose to 18.6% from 17.5%. “Domestic two-wheelers continued to grow on the back of robust demand for Pulsar, Dominar, KTM and Husqvarna bikes,” the company said.
Bajaj Auto’s new facility in Chakan, which will manufacture high-end motorcycles and electric vehicles, is expected to commence production in 2023.