Bajaj Auto Q2 Results: Net profit to rise 13% YoY

Bajaj Auto, a prominent manufacturer of two and three-wheelers, is set to unveil its financial results for the second quarter of FY24 on October 18, 2023. Analysts’ consensus suggests a 13.6% growth in Q2FY24 net profit, while an anticipated decline in sales volumes may impact revenue growth, with an estimated increase of 5.33%. In the quarter under review, the company witnessed an 8.4% year-on-year drop in total sales volume to 10,53,953 units. Kotak Institutional Equities projects a 50 basis points quarter-on-quarter improvement in Bajaj Auto’s EBITDA margin for Q2FY24, attributed to a more lucrative product mix, including a higher proportion of three-wheelers and premium two-wheelers, partially offset by an increased share of electric two-wheelers. The expected figures for Q2FY24 are a revenue of ₹10,939 crore, net profit of ₹1,775.7 crore, EBITDA of ₹2,129 crore, and an EBITDA margin of 19.5%.

Bajaj Auto

In the second quarter of FY24, Bajaj Auto witnessed an 8% YoY decline in volumes. This decrease was primarily driven by a 19% YoY reduction in the domestic two-wheeler segment, influenced by a base effect. Additionally, the export two-wheeler segment experienced a 5% YoY decline due to weakened demand in African and South Asian regions. The export three-wheeler segment also faced a significant 31% YoY decrease. However, these declines were partially offset by an impressive 81% YoY increase in domestic three-wheeler segment volumes, as reported by Kotak Institutional Equities.

The expectation is for revenues to increase by 7% YoY, driven mainly by an 18% YoY rise in average selling prices (ASPs). This increase is attributed to a higher mix in the three-wheeler segment, a reduced mix in the domestic economy motorcycle segment, a lowered mix in the export two-wheeler segment, price hikes, and favorable foreign exchange rates. The brokerage firm also anticipates an 8% YoY decline in volumes. Despite a 9% YoY decrease in export volumes, there is an overall positive sentiment regarding demand as concerns related to currency and macros stabilize. Two-wheeler domestic volumes declined by 9% YoY, partly due to the festive season inventory stocking, which shifted from 2Q to 3Q compared to the previous year.

Motilal Oswal Financial Services foresees a quarter-on-quarter margin expansion of 20 basis points (+200 basis points YoY), primarily driven by savings from declining commodity costs and implemented price increases. According to Prabhudas Lilladher, there is an expectation of a 6% year-on-year revenue growth. This optimistic outlook persists despite a decline of 8% YoY in volumes, which is counterbalanced by an improved product mix resulting in higher average selling prices (ASP). The brokerage house also predicts a significant enhancement in the EBITDA margin, with an increase of 220 basis points to reach 19.4% YoY.