With average export realisations propped up by a weak rupee at around Rs 60 to a dollar compared with Rs 50 a year ago, Bajaj Auto’s has delivered robust performance in the September quarter.

But this hides the weak show on the volumes front. Overall export volumes have grown by just 2.75 per cent in this period, with three-wheeler exports being the worst hit, showing 8.5 per cent decline in volumes vis-à-vis the numbers reported in the same period last year.

Domestic volumes too, have been nothing to write home about, thanks to the ongoing local slowdown.

Apart from higher export realisations, what has helped the 13 per cent profit growth is the drop in input costs. Raw materials as a percentage of sales came down from 76 per cent last year to 69 per cent now.

These two factors boosted operating margins to 21.9 per cent compared with 18.4 per cent in the same quarter last year. The operating margins look even better at 23 per cent after excluding a mark-to-market loss of Rs 33 crore incurred on hedging exports.

Outlook

With 35-40 per cent of its revenues coming from exports, the company could continue to benefit if the weakness in the rupee prolongs.

Meanwhile, it is hoping to boost domestic sales during the festival season from its recent and planned launches such as the Discover 125T, 100M, and so on.

A majority of the launches is expected to be in the middle-of-the-road segment (110-125 cc bikes) which has seen good offtake in the last one year.

Three-wheeler volumes, both domestic and exports, may look up in the second-half of this year as the company is revamping/upgrading its entire three-wheeler portfolio. This is expected to trigger quicker replacement of existing vehicles.

Related Topics