Bajaj Auto Q2 Snapshot: Earnings Could Increase 9-15% YoY; margin expansion expected to be moderate

Two-wheeler maker Bajaj Auto is expected to post a 9-15% year-on-year (YoY) increase in September quarter profit on a 10-17% increase in net sales. Ebitda margin expansion could remain subdued, due to a weaker product mix, analysts said.

Bajaj Auto’s volumes for the quarter rose 23% sequentially and analysts believe demand for two-wheelers is showing signs of recovery, although exports remain weak.

“Semiconductor shortages have started to ease, benefiting the production of motorcycles and high-end electric vehicles,” said Motilal Oswal Securities, adding that the overall benefits of a cost correction Commodities and a weaker rupee will be reflected in the December quarter.

Regarding second quarter earnings, Elara Securities sees a 14.8% YoY increase in standalone net profit to Rs 1,462.90 crore from Rs 1,274.60 crore in the corresponding quarter of the year last.
This brokerage expects sales to jump 17.7% year-on-year to Rs 10,309.30 crore from Rs 8,762.20 crore in the same quarter last year. Ebitda margin is expected to reach approximately 16.2%, a slight improvement of 5 basis points compared to the June quarter margin and an increase of almost 26 basis points compared to the 16% of the previous year .

IDBI Capital sees the two-wheeler maker’s profit rise by 11.7% to Rs 1,424 crore and sales rise by 12.6% to Rs 9,868.60 crore. Prabhudas Lilladher factors in a profit of Rs 1,391.30 crore, up 9.2% year-on-year. It sees sales at Rs 9,675.10 crore, up 10%
“We expect QoQ revenue growth of 21%, driven by a 23% increase in volumes. We expect only 30 basis points of margin improvement as export volumes were impacted in the quarter. , which led to poor product mix,” Prabhudas Lilladher said in his earnings preview.

Kotak Institutional Equities said the 23% QoQ increase in September quarter volumes was due to a 98% sequential increase in domestic two-wheeler volumes due to improved chip availability and the stockpiling ahead of the holiday season.

He said a 35-71% sequential increase in the domestic and export three-wheeler segments was partly offset by a 25% quarter-on-quarter decline in two-wheeler export volumes due to the slowdown in demand on the African market.

“We expect revenue to grow 20% quarter-over-quarter, driven by a 23% increase quarter-over-quarter in volume and
a 2% QoQ decline in ASPs due to a lower mix from the aftermarket segment and a higher mix from the domestic economy motorcycle segment, partially offset by a higher mix from the three-wheeler segment” , did he declare.

ASP stands for Average Selling Price.

This brokerage pegs the profit figure at Rs 1,391.40 crore. Sales are expected to rise 9.9% year-on-year to Rs 9,632 crore, up 9.9%.

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