Bajaj Auto beats Q3 profit estimates on higher prices, domestic demand

Homegrown automaker Bajaj Auto Limited on Wednesday reported a bigger-than-expected third-quarter profit, as strong domestic demand and an increase in prices of its motorcycles and scooters made up for weak exports. 

The company reported standalone net profit of 1,491.42 crore for the quarter ended 31 December, 2022 (Q3FY23), up 22.8% from a year ago. It was 1,214 crore in the year-ago period.

The two-and three-wheeler maker’s revenue from operations came in at 9,315.14 crore, up 3% on-year with robust double-digit revenue growth in the domestic business offsetting the drop in exports arising from the challenging market context. Overall spares revenue came in at an all-time high, the company said.

Demand from high-income consumers for everything, from home care goods to motorcycles, has held up in recent quarters despite price hikes by Corporate India to protect its bottomline from higher costs.

The automobile company has reported highest-ever EBITDA (earnings before interest, tax, depreciation and amortisation) at 1,777 crore, surpassing the record set in the previous quarter.

Meanwhile, EBITDA margins rose 19.1% to as against 15.6% in the same quarter last year. This was led by judicious pricing, better dollar realisation and richer product mix.

Bajaj Auto’s total expenses dropped 1% in the third quarter.

Analysts, on average, had expected a profit of 1,364 crore, according to Refinitiv IBES data.

The domestic business saw sustained double digit revenue growth across both two wheelers and three wheelers. The two wheelers performance was buoyed particularly by solid 125 cc+ festive season sales while three wheelers volumes surged, leading to its record high market share, the company said.

On its overseas business, the quarter marked the launch of motorcycles in Brazil with the well-recognized Dominar brand, the homegrown automaker said.

The company through its wholly owned subsidiary, is establishing its capabilities and go-to-market network to leverage the attractive market opportunity, it said in a statement.

On Wednesday, Bajaj Auto scrip was up 1.45% to settle at 3,740.00 apiece on NSE. The stock climbed 11% last year, compared with the Nifty auto index’s 15% gain.

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