Bajaj Auto: Impressive performance - Views on News from Equitymaster

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Bajaj Auto: Impressive performance

Oct 24, 2001

Bajaj Auto, the second largest two-wheeler manufacturer, has reported a 131% rise in net profit for 2QFY02 to Rs 1,420 m. Sales during the aforesaid quarter were also up 12% to Rs 9,298 m.

(Rs m) 2QFY01 2QFY02 Change
Sales 8,299 9,298 12.0%
Other Income 720 1,037 44.0%
Expenditure 7,746 7,958 2.7%
Operating Profit (EBDIT) 554 1,339 141.9%
Operating Profit Margin (%) 6.7% 14.4%  
Interest 13 11 -12.5%
Depreciation 422 446 5.7%
Profit before Tax 839 1,920 128.7%
Extraordinary item (195) (39) -79.8%
Tax 30 460  
Profit after Tax/(Loss) 614 1,420 131.2%
Net profit margin (%) 7.4% 15.3%  
No. of Shares (eoy) (m) 119.4 101.2  
Diluted number of shares 101.2 101.2  
Earnings per share (Rs)* 24.3 56.1  

Total production (two and three-wheelers) and sales during the first six months ended September 30, 2001 were 646,934 and 641,060 respectively. This was higher by 1.1% and 0.3% respectively over the corresponding period of the previous year. The performance of the company in 2QFY02 is impressive. This could also be aided on the back of new launches in the 'Caliber' and scooter range. The company sold 327,713 two & three wheelers in 2QFY02 as compared with 313,557 units in the corresponding quarter of the previous year, a growth of 4.5%.

Other Income for the quarter ended September 30, 2001 includes a premium of Rs 720 m received from the overseas partner for life insurance business (this is in addition to the Rs 450 m received in quarter ended June 30, 2001 for the general insurance business). The total premium received for the six months ended September 30, 2001 aggregates to Rs 1,170 million.

Operating margins have also increased sharply during the quarter from 6.7% in 2QFY01 to 14.4% in 2QFY02. Bajaj Auto had announced a voluntary retirement scheme for its employees in response to which 171 employees have opted for the scheme. The company`s plant at Akurdi, Pune which manufacturers the geared range of scooters continues to operate a five day working week. A combination of these two factors has resulted in slower growth in expenses during the quarter.

The cost break-upů
(Rs m) 2QFY01 2QFY02 Change
Change in stock 25 118 374.3%
Material costs 5,677 5,886 3.7%
Staff cost 625 533 -14.8%
Other exp 1,503 1,507 0.2%
Expenses capitalised (85) (85) -
Total 7,746 7,958 2.7%

The scrip is currently trading at Rs 323 at a P/E multiple of 5.7x annualised 2QFY02 earnings.

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