Higher realisation from exports, operating leverage and price hike in the domestic market helped

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Bajaj Auto report highest ever-quarterly profit at Rs 725.80 crore (up six per cent) for the quarter ended September 30. Total income of the company rose 20.3 per cent to Rs 5,267.26 crore during the quarter.

The company has managed to report higher margins of 20.1 per cent against analysts’ estimate of 19.2-19.4 per cent. The country’s largest three-wheeler manufacturer expects margins to go up by a percentage point due to the new foreign trade policy and focus market scheme announced by the central government.

“The average profitability per vehicle sold was around Rs 13,000, which is best in the past two years,” said Deepak Jain, assistant vice-president at Sharekhan.

The company reported highest-ever quarterly motorcycle sales at 10.27 lakh units, up 16 per cent, while commercial vehicle sales rose 17 per cent year on year to 136,780 units.

“We have hiked prices by 3.5 per cent for two- and three-wheelers that are exported after the central government withdrew the duty entitlement pass book (DEPB) scheme. Under DEPB, we were getting 9 per cent benefit. It is replaced by a new duty drawback scheme for exporters across products under which we get 5.5 per cent benefit. The gap between the two was made up by a price increase of 3.5 per cent,” managing director Rajiv Bajaj told Financial Chronicle in an e-mail response.

Total exports of Bajaj Auto, including motorcycles and three-wheelers, grew 38 per cent to 424,134 units during Q2. In terms of value, exports grew 50 per cent to Rs 1,733 crore. The contribution of overseas markets to total vehicles sold was over 36 per cent, the company said in a statement to stock exchanges.

Due to a rise in raw material and fuel costs, Bajaj Auto has increased prices of Discover and Pulsar models by Rs 500 in the domestic market. However, the company has not increase prices of lower priced Boxer and Platina range of motorcycles in India. “In three-wheelers, the prices have been hiked for select models,” said Kevin D’Sa, chief financial officer at Bajaj Auto.

D’Sa expects input costs to remain stable over the next two quarters. “There are more chances of upside in margins than downside due to the two percentage points benefit we would get due to the foreign trade policy and focus market scheme,” he added.

Bajaj said the company would be able to produce 20,000 less Boxer motorcycles this month due to a law-and-order situation at Pantnagar in Uttarakhand.