Bajaj Auto's Q2 Profit Jumps 20% As Price Hikes, Forex Realizations Improve

Bajaj Auto saw a recovery in profits, margins, and revenues in the quarter on both a yearly and sequential basis. Revenues rose 16% year-on-year in Q2FY23 to ₹10,203 crore, the highest ever in a quarter for the automaker, aided by a recovery in domestic motorcycle sales on the back of improving semiconductor chip supplies.

A 27% year-on-year decline in high-margin two-wheeler export volumes in the quarter was offset by a 27% increase in domestic motorcycle sales for the same period. Overall two-wheeler volumes, however, declined 1% during this time.

Bajaj Auto saw a 26% year-on-year increase in its EBITDA margins for the quarter under consideration at ₹1759 crore.

Calibrated product price hikes, increased realizations from favourable foreign exchange rates, and lower internal costs (employee and other expenses) propped-up margins by over 100 basis points for the company, it said.

"Our domestic volumes have nearly doubled over the previous quarter across two-and three-wheelers, which helped cushion the drop in deteriorating macro-economic conditions in export markets", Bajaj Auto said in a statement. However, a strong show in some ASEAN markets, such as the Phillipines, arrested the exports slump to some extent, it added.

"On the sales front, the company has witnessed some setback in export markets due to a muted global outlook. Further, Bajaj Auto has recently closed a share buyback of 64.1 lakh shares ( about 2.2% of outstanding shares) from the open market utilising the intended ₹2,500 crore as buyback amount with average acquisition price derived as ~ Rs3,900/share. The company has commenced upon its journey towards electrification with the Chetak scooter with sales volume in this domain pegged at nearly 12,000 units till August 2022.(YTDFY23). The company’s product on the Electric 3-W space is still awaited. The key monitorables going forward at Bajaj Auto would be demand outlook in the export market and further journey towards electrification", a report by ICICI Direct Research said.

Bajaj highlighted that it is ramping up its electric two-wheeler portfolio with the Chetak with a presence in 39 cities at present. The company is also making a continued effort to unlock supply chain constraints, it said.