Bajaj Auto announced the second quarter results of financial year 2011-2012 (2QFY12). The company reported a 16% YoY increase in revenues, while profits grew by 6% YoY. Here is our analysis of the results.
(Rs m) | 2QFY11 | 2QFY12 | Change | 1HFY11 | 1HFY12 | Change |
Units sold | 1,000,570 | 1,164,137 | 16.3% | 1,928,906 | 2,256,952 | 17.0% |
Net sales | 43,418 | 52,673 | 21.3% | 82,319 | 100,446 | 22.0% |
Expenditure | 34,447 | 42,099 | 22.2% | 65,578 | 80,763 | 23.2% |
Operating profit (EBDITA) | 8,972 | 10,574 | 17.9% | 16,741 | 19,682 | 17.6% |
EBDITA margin (%) | 20.7% | 20.1% | 20.3% | 19.6% | ||
Other income | 837 | 745 | -11.0% | 1,654 | 1,476 | -10.8% |
Interest (net) | 7 | 202 | 3010.8% | 13 | 205 | 1497.7% |
Depreciation | 300 | 394 | 31.6% | 618 | 701 | 13.4% |
Profit before tax | 9,503 | 10,722 | 12.8% | 17,764 | 20,253 | 14.0% |
Exceptional items | - | (954) | - | (954) | ||
Tax | 2,682 | 2,510 | -6.4% | 5,042 | 4,930 | -2.2% |
Profit after tax/(loss) | 6,821 | 7,258 | 6.4% | 12,722 | 14,369 | 12.9% |
Net profit margin (%) | 15.7% | 13.8% | 15.5% | 14.3% | ||
No. of shares (m) | 289.4 | 289.4 | ||||
Diluted earnings per share (Rs)* | 99.4 | |||||
Price to earnings ratio (x)* | 17.7 |
The company in total sold 1,164,137 units during 2QFY12 as compared to 1,000,570 units in the corresponding quarter last year. Total motorcycle volumes grew by 16% YoY and formed about 88% of the total unit sales. Three-wheeler sales rose by 17% YoY to 136,780 units.
Domestic motorcycle sales formed about 59% of the total volumes during the quarter and grew by 8% YoY. Motorcycle exports did better to grow by 37% YoY to stand at about 342,686 units (22% of total volumes). Volume sales of the company's two flagship brands - Pulsar and Discover - averaged at about 86,000 units and 133,000 units per month respectively.
In the three-wheeler segment, the 17% YoY volumes growth was largely led by exports. While three-wheeler exports grew by a robust 44% YoY, domestic sales declined by 9% YoY as high interest rates and fuel prices dampened demand. Three-wheeler exports formed about 60% of the total three-wheeler sales during the quarter. Total three-wheeler volumes formed about 12% of total unit sales.
(Rs m) | 2QFY11 | 2QFY12 | Change | 1HFY11 | 1HFY12 | Change |
Raw materials/ purchases | 30,712 | 37,616 | 22.5% | 58,394 | 72,280 | 23.8% |
% sales | 70.7% | 71.4% | ||||
Staff cost | 1,142 | 1,311 | 14.8% | 2,405 | 2,700 | 12.2% |
% sales | 2.6% | 2.5% | ||||
Other expenditure | 2,593 | 3,173 | 22.3% | 4,779 | 5,784 | 21.0% |
% sales | 6.0% | 6.0% | ||||
Total expenditure | 34,447 | 42,099 | 22.2% | 65,578 | 80,763 | 23.2% |
The management is quite confident on the long term outlook of the company. Bajaj Auto has gone in for a price hike across products (domestic and exports). And as such would help it offset the impact of the rising prices to a certain extent.
Further, the company is looking at expanding its dealer network. These would be located in the semi-urban and rural markets and would eventually help in boosting volumes. Although uncertainty is likely to persist in the domestic market in the near term due to a high interest rates and fuel prices, the company expects exports to do pretty well.
On an overall basis, we are confident of the company's long term outlook despite short term concerns. Having said that, the stock price of the company has run up in recent times and at the current levels looks fairly valued.