Bajaj Auto back on track as exports, domestic sales surge

Bajaj Auto is hopeful of wrapping up this fiscal with total sales of over four million units, up from 3.6 million units in 2016-17. Of this, domestic sales of two and three-wheelers are likely to be in the range of 2.3 million units with exports taking up the balance 1.7 million units.

The company declared its second quarter results for 2017-18 on Tuesday where profit after tax fell marginally to ₹1,112 crore from ₹1,123 crore in the same period last year.

The turnover increased a tad to ₹6,863 crore from ₹6,774 crore, while the Ebitda margin was 20.8 per cent, down from 22.3 per cent in Q2 of 2016-17.

Challenges to cope S Ravikumar, President (Business Development), told BusinessLine in a telephone interview that things were looking a lot better now after a series of headwinds that began with demonetisation last November. While this impacted the fourth quarter showing in 2016-17, there were further challenges to cope with in the beginning of this fiscal.

These included the transition from Bharat Stage III to IV emission norms, while the recently introduced Goods and Services Tax also involved a fair deal of adjustment within the supply chain ecosystem. However, the worst seems to be over now in Q2 where Bajaj Auto’s market share in September is back to 20 per cent with Ebitda at 20.8 per cent.

By the end of Q2, its overall market share in two-wheelers is at 17 per cent with the Pulsar firmly on track with 45 per cent.

According to Ravikumar, the CT 100 electric start has also fitted in nicely with the new Platina and volumes are quite brisk in the entry space.

With sales of 2.47 lakh motorcycles in September, Bajaj Auto is now reasonably confident of doing over 200,000 units each month for the reminder of the fiscal. This optimism is based on the strong showing of the Pulsar in the sports segment and the buoyancy in the entry-level space with the CT 100 and Platina.

Ravikumar said exports were also looking up after a long lull of nearly eight successive quarters. For the first two quarters of this fiscal, exports have been at 4.1 lakh and 4.03 lakh units, respectively.

“Africa has been stabilising, while Bangladesh, Nepal, the Philippines and Malaysia are doing well,” said Ravikumar. With total sales for the first six months at 1.96 million units (including exports), Bajaj Auto is reasonably confident that it can breach the four-million-unit mark by the end of 2017-18.

Dominar sales As for other motorcycle brands, the Dominar 400 has been clocking 4,500 units each month with exports taking up 2,500 units. “We do believe it will take time for the brand to gain ground in India since it has an established player like Royal Enfield to contend with,” said Ravikumar.

Some of the big markets for the Dominar 400 are Latin America and parts of ASEAN with other countries poised to join the list.

However, things have perhaps not been as brisk for the ‘V’ commuter motorcycle riding high on the legacy of INS Vikrant. It will be interesting to see how Bajaj works towards increasing its sales even while rivals like Honda Shine are doing well in this product space where Hero MotoCorp’s Passion and Splendor rule the roost.

“We hope to sign off with a market share of 23 per cent in March. Incidentally, things are also going nicely with KTM at Chakan,” said Ravikumar even while the Husqvarna brand is scheduled to join the line-up next year.