Bajaj Auto Q3 results: Profit declines 23% amid slump in volumes; misses estimates

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Bajaj Auto

Profit declines: Bajaj Auto has reported 22% on-year drop in net profit to Rs 1,214 crore in the Oct-Dec 21 period, impacted by a drop in demand. Analysts had earlier estimated a profit of about Rs 1,600 crore.

Tepid growth in revenue: Bajaj Auto’s revenue from operations rose 1.25% YoY to Rs 9,022 crore from Rs 8,910 crore in the same quarter a year ago. Analysts had earlier estimated a revenue of about Rs 9,030 crore. 

Volumes decline: There has been a 10% on-year decline in Bajaj Auto’s overall volume to 11.81 lakh units as compared to 13.86 lakh units in the previous year. The company said that the domestic motorcycle market industry recorded a decline of 23% YoY. 

Bajaj Auto results

In contrast, Bajaj Auto fared marginally better recording sales of over 469,000 units, a decline of 20%. Notably, exports continue to record strong sales with average monthly volumes in excess of 219,000 units. For the calendar year 2021, exports, by volume, exceeded 2.5 million units - highest ever, said the company. On an overall basis, the Commercial Vehicles segment recorded an 18% on-year growth. 

Margins decline: Bajaj Auto’s EBITDA (earnings before interest, taxes, depreciation, and amortization) fell 20% on-year to Rs 1,405 crore. The Ebitda margin declined both sequentially and year-on-year to 15.6%. It was 16.4% in the Jul-Sep 21 period and 19.8% in the same quarter last year. 

Bajaj Auto results: Review

Bajaj Auto has reported a lacklustre set of numbers for the Oct- Dec 21 period.  A lot of factors including a slowdown in rural demand, as well as a decline in export volumes, have weighed on the company’s earnings in the quarter. While the two-wheeler segment underperformed, strong growth shown in the commercial vehicles is an encouraging sign for the company.

In the domestic market, the auto industry is facing a lot of challenges including rising raw material cost, chip shortages and a disruption led by electric vehicle companies. This has hurt the volume growth for the company. However, exports continue to show good traction. 

Going forward, the demand is expected to improve. The margins have largely bottomed out, and are expected to recover from a cyclical though. Softer prices of key commodity inputs like steel and aluminium are expected to aid margin recovery in the sector.