After Sep qtr blitz, Bajaj Auto’s profitability engines may cool
₹2,133 crore. Jefferies India’s analysts reckon that Q2 Ebitda was at an “all-time high" and Ebitda per vehicle, which was up 6% sequentially, was also at a new high. One factor that aided Q2 margin was the rise in the share of three-wheelers (3Ws) in the sales mix.
On the other hand, operating revenue growth of 5.6% year-on-year to ₹10,777 crore is a tad underwhelming. Growth was entirely driven by price realizations considering that sales volume had dropped by 8%. Here, volumes of two-wheelers (domestic plus exports) and 3W exports, fell.
What is encouraging is that both two-wheeler and 3W export volumes have risen sequentially. The company expects the recovery in export volumes to be gradual in the backdrop of uncertain macro conditions, geopolitical tensions, and unavailability of US dollars in some countries. Jefferies is factoring Bajaj’s monthly export volumes to rise from around 139,000 units in Q2 to 151,000 in H2FY24 and 163,000 in FY25 (for comparison: FY22 was 209,000).
Meanwhile, domestic demand is on a strong footing. The festive season has begun well and the industry is expected to grow by 12-15% during the festivals this year, said the management in the earnings conference call. The automaker’s recent launches in collaboration with Triumph Motorcycles are garnering good responses and it plans to ramp up the capacity.
Bajaj’s market share in electric vehicles is gradually accelerating. In September, the automaker’s electric two-wheeler market share was 11% versus about 5% in FY23. It plans to launch new electric two-wheelers.To be sure, Bajaj’s Q2 margin was better than some analysts’ expectations, but sustaining it at this level would be a tall order.
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