Bajaj Auto expects FY22 to be a record year for the company’s exports. The maker of Pulsar and Discover models has a strong order book for the overseas markets that will serve as an antidote to the pain inflicted by Covid-19 in the domestic market. Net profit for the March quarter at Pune-based company rose two per cent while revenue from operations jumped 26 per cent for the March quarter, the company said in a statement. The earnings got a boost from a higher realisation of exports and a higher contribution of pricier models in the overall sales.
“Assuming there are no more “Black Swan” events and there’s no second wave or third wave globally FY22 will be a record year of exports for Bajaj Auto. FY20 was our best year. I think we will beat that,” said Rakesh Sharma, executive director, Bajaj Auto. Close to 75 percent of it will be driven by Africa, Latin America and the Middle East.
The net profit at the company for the three-month period rose to Rs 1,332 crore from Rs 1310 crore, while net revenue climbed up to Rs 8,596 crore from Rs 6,816 crore a year ago. However, a sharp rise in commodity prices pulled margins down to 18.1 per cent from 19 per cent last year. Bajaj’s Board of Directors recommended a dividend of Rs 140 per share – 1,400 per cent (previous year 1,200 per cent). Total payout towards dividend would amount to Rs 4,051 crore--about 90 per cent payout ratio.
Amid the raging pandemic, the outlook on domestic business however remains hazy. At least 25 per cent of Bajaj’s dealerships are shut due to the lockdown in various states and another 10 per cent are operating for limited hours due to Covid related restrictions, said Sharma. “There is a substantial disruption in the domestic market for both two and three wheelers in the country for the month of April. We will continue to face hardships in the first half of May. But we are hopeful of a strong resurgence in demand once pandemic lets up and vaccination programme gathers momentum,” he added.
Meanwhile, for the quarter gone by, a strong exports volumes and better realization bumped up earnings. Bajaj exported a total of 635,545 motorcycles and commercial vehicles in the fourth quarter up 24 per cent year-on-year. A richer sales mix, which came on back of strong volume growth in premium models--125cc and above and price increases to beat the cost escalations--also helped. Premium models accounted for 60 per cent of the total unit sales during the fourth quarter, against 46 per cent in the third quarter. “We have been pursuing the premiumization strategy and been particularly very successful with the Pulsar 125,” said Sharma.
“We expect Bajaj’s exports business to post a healthy growth in FY22E on the back of positive traction in African market. We also expect the domestic two-wheeler industry to recover gradually in 2QFY22E onwards, while its domestic three wheeler business would bounce back strongly in FY22E. In view of healthy exports, recovery in high margin 3W business, margin expansion, improving return ratio and strong balance sheet, We have BUY rating on Bajaj Auto with a two-year target price of Rs 3,870," he said.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU