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Bajaj Auto Limited: Domestic Market taking Cues from Export Slowdown! - Views on News from Equitymaster
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  • Feb 17, 2017 - Bajaj Auto Limited: Domestic Market taking Cues from Export Slowdown!

Bajaj Auto Limited: Domestic Market taking Cues from Export Slowdown!
Feb 17, 2017

Bajaj Auto Limited has announced its financial results for the third quarter of the financial year 2016-17 (3QFY17). During the quarter, company faced headwinds both in the exports and the domestic markets. Revenue were down 8.7% YoY and net profits were down by 4.8%.

Performance summary
  • For 3QFY17, the revenue was down by 8.7% YoY. Overall volumes de-grew by10.5% YoY. While the exports market continued to be a drag and declined by 17% YoY, demonetisation spoiled the performance of the domestic business as well. Domestic volumes were down 5%.
  • Given the robust product mix (higher share of Platina over CT100) and price hikes (for Complying BSIV), realizations were up 2% YoY.
  • Motorcycles - Domestically it declined by 3% YoY. The good festive season was negated by the disruption caused by demonetisation. Management indicated, the same trend is expected for at least one quarter.
  • Commercial Vehicles (Three wheelers) - Three wheelers saw more pressure than the two wheeler industry because most of the vehicles are financed and loan availability for rickshaw owners is very difficult in the current environment. Volumes for the quarter were down 19% YoY.
  • Exports markets continued to be under pressure. Both motorcycle and commercial vehicles volumes were down by 18% YoY and 15% respectively.
  • Operating profits for the quarters declined by 10.9% YoY with margins contracting by 51.1 bps to 20.6%. Margins surprised positively in spite of increase in the raw material cost and expectation of high discounts to negate the demonetisation effect. However, robust product mix helped the company to maintain its margins.
  • Net profits were down by 4.8% YoY, however margins expanded by 75 bps to 18.2%.

    Consolidated Financial Performance Snapshot
    (Rs m) 3QFY16 3QFY17 Change
    No. of Vehicles sold 951,498 851,645 -10.5%
    Net sales 55,478 50,669 -8.7%
    Expenditure 43,764 40,229 -8.1%
    Operating profit (EBDITA) 11,715 10,440 -10.9%
    EBDITA margin (%) 21.1% 20.6% -51.09
    Other income 2,425 3,187 31.4%
    Depreciation 746 772 3.4%
    Interest 2 3 23.8%
    Profit before tax 13,391 12,853 -4.0%
    Tax 3,686 3,612 -2.0%
    Profit after tax / (loss) 9,705 9,241 -4.8%
    Net profit margin (%) 17.5% 18.2% 74.58
    No. of shares (m) 289.4
    Diluted earnings per share (Rs)* 134.3
    Price to earnings ratio (x)* 20.7

    *trailing twelve-month earnings

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