A combination of good volume growth, improved realisations and low raw material costs helped Bajaj Auto clock 29 per cent growth in profits to ₹803 crore in the quarter ended March 2016 (over the same period last year).

Despite sluggish exports, overall volumes grew 11.4 per cent, aided by good domestic off takes in both the two-wheeler and three-wheeler segments.

Apart form healthy volumes, sales growth of 14.7 per cent to ₹5,304 crore was aided by higher realisations.

Strong demand for the recently launched Avengers (premium segment), and the introduction of the V15 bike (125-150cc category) towards the end of the fiscal, helped push up realisations.

Average realisation per vehicle for the quarter ended March 2016 grew about 3 per cent to ₹60,793.

Raw material cost as a percentage of sales came down to 66 per cent from the 71.7 per cent recorded a year ago. Better product mix and benign input costs helped operating margins expand by 270 basis points to 21.3 per cent in the quarter.

Outlook The company targets volume growth of 18 per cent in 2016-17. It may be able to pull it off if sentiments improve among two-wheeler buyers.

Good monsoons and higher disposable incomes from Pay Commission dole-outs are expected to benefit bike sales.

Market share Besides, in what was a difficult fiscal for the two-wheeler industry, Bajaj Auto managed to increase its overall domestic market share by 50 basis points to 11.5 per cent in 2015-16 over 2014-15, due to successful launches across the commuter, executive and premium segments.

The company also has aggressive launch plans for the ongoing fiscal including an upgrade on the Platina in the commuter segment and an all-new Pulsar.

But poor economic conditions and foreign currency constraints in key export geographies such as Nigeria and Egypt may continue to impact export volumes.

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