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Bajaj Auto: Domestic saves the blushes
Nov 8, 2016

Bajaj Auto Limited has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, company faced pressure in the exports markets but outgrew the industry in the domestic market. Revenue grew marginally by 0.4% YoY and net profits grew by 13.8%.

Performance summary
  • For 2QFY17, the revenue grew marginally by 0.4% YoY. Overall volumes de-grew by 2.3% YoY. Robust growth of 19% in the domestic market was offset by a 25% decline in the exports market.
  • Given the robust product mix and price hikes in the domestic market, realizations were up 2.8% YoY.
  • Motorcycles - Domestically it grew by 18% YoY. This was on the back of good demand for CT100, Platina, and the newly launched 'V15'. Further, the avenger and pulsar family has also shown good signs of recovery.
  • Commercial Vehicles (Three wheelers) - In the domestic market, company continued to gain market share and volumes grew by 27% YoY. This was against an industry growth of 6%. Bajaj has recently entered the cargo segment, which is the new growth area for the company.
  • The growth in the domestic market has been offset by the disappointing export markets. Both motorcycle and commercial vehicles volumes were down by 22% YoY and 38% respectively.
  • Operating profits for the quarters declined by 1.6% YoY with margins contracting by 39.9 bps to 20.2%. This was primarily due to low share of profitable exports business. However, given the poor export performance, the margins came in better than expected.
  • Net profits grew more than operating profits at 13.8% YoY with margins expanding by 202 bps to 18%.
  • During the first half of the financial year 2016-17 (1HFY17), top-line declined by 2.1% YoY and net profits grew by 9%.

    Consolidated Financial Performance Snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    No. of Vehicles sold 1,056,596 1,031,945 -2.3% 2,069,625 2,026,678 -2.1%
    Net sales 64,075 64,323 0.4% 122,888 125,211 1.9%
    Expenditure 50,908 51,362 0.9% 98,318 100,486 2.2%
    Operating profit (EBDITA) 13,167 12,961 -1.6% 24,570 24,725 0.6%
    EBDITA margin (%) 20.5% 20.2% -39.91 20.0% 19.7% -24.70
    Other income 2,680 3,420 27.6% 5,742 6,091 6.1%
    Depreciation 780 770 -1.4% 1,564 1,544 -1.3%
    Interest 3 7 100.0% 5 9 100.0%
    Profit before tax 15,063 15,605 3.6% 28,743 29,262 1.8%
    Exceptional item -374 326 -695 137
    Tax 4,540 4,378 -3.6% 8,646 8,251 -4.6%
    Profit after tax / (loss) 10,149 11,554 13.8% 19,402 21,148 9.0%
    Net profit margin (%) 15.8% 18.0% 212.23 15.8% 16.9%
    No. of shares (m) 289.4
    Diluted earnings per share (Rs)* 125.0
    Price to earnings ratio (x)* 22.72
    *trailing twelve-month earnings
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