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Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead? - Views on News from Equitymaster
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  • Jul 6, 2017 - Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead?

Bajaj Auto Limited: Finishes the Year with Headwinds. Poised for a Recovery Ahead?
Jul 6, 2017

Bajaj Auto Limited has announced its financial results for the fourth quarter of the financial year 2016-17 (4QFY17). 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 15.5%.

Performance summary
  • For 4QFY17, the revenue was down by 8.7% YoY. Overall volumes de-grew by 10% YoY. While the exports market showed some recovery, and was down 3% YoY, the domestic market declined by 14% YoY.
  • The transition from BS-III to BS-IV (liquidating inventory at higher discounts) and raw material pressure was a setoff for the price hikes during the quarter. Realisations were up 1.1% YoY.
  • Motorcycles - Domestically it declined by 12% YoY. The spill over effect of the demonetisation and the ban of BS-III vehicles.
  • 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 30% YoY.
  • Exports markets showed some signs of improvement and motorcycles grew by 1% YoY but commercial vehicles were down by 25% YoY.
  • Operating profits for the quarters declined by 21.4% YoY with margins contracting by 281.85 bps to 17.4%. The contraction in the margins was on the back of high discounting and unfavourable raw material prices.
  • Net profits were down by 15.5% YoY, with margins contracting by 124 bps to 15.4%.
  • For FY17, sales were down by 3.3% YoY with net profits down by 2.6% YoY. The company has declared a dividend of Rs 55 per share.

    Standalone Financial Performance Snapshot
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    No. of Vehicles sold 872,458 787,627 -9.7% 3,893,581 3,665,950 -5.8%
    Net sales 57,102 52,128 -8.7% 238,832 230,880 -3.3%
    Expenditure 45,568 43,069 -5.5% 191,013 186,657 -2.3%
    Operating profit (EBDITA) 11,534 9,060 -21.4% 47,819 44,224 -7.5%
    EBDITA margin (%) 20.2% 17.4% -281.85 20.0% 19.2% -86.79
    Other income 2,569 2,936 14.3% 10,736 12,220 13.8%
    Depreciation 761 757 -0.5% 3,072 3,073 0.0%
    Interest 4 2 -38.5% 11 14 33.3%
    Profit before tax 13,338 11,236 -15.8% 55,473 53,356 -3.8%
    Tax 3,844 3,218 -16.3% 16,177 15,081 -6.8%
    Profit after tax / (loss) 9,493 8,018 -15.5% 39,297 38,276 -2.6%
    Net profit margin (%) 16.6% 15.4% -124.36 16.5% 16.6% 12.44
    No. of shares (m)         289.4  
    Diluted earnings per share (Rs)*         130.8  
    Price to earnings ratio (x)*         20.9  

    *trailing twelve-month earnings

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