Bajaj Auto net dips 6%, revenue beats estimates

Bajaj Auto, the two-wheeler and three-wheeler major, on Thursday posted a 5.6 per cent fall in net profit as sales were hit by the changeover to BS-IV compliant vehicles and the transition to GST.

Profit stood at Rs 924 crore in the first quarter ended 30 June, which was almost in line with expectations.  The Pune-headquartered automaker had reported a net profit of Rs 978 crore in the same quarter last year.

Its revenues were ahead of estimates, though it fell 3.9 per cent to Rs 5,854 crore compared with Rs 6,089 crore in same quarter last year following decline in sales volumes. The company sold 8.88 lakh units during the quarter, which slipped 10.7 per cent compared with 9.94 lakh units sold in year-ago quarter.

Profit was expected at Rs 910 crore on revenue of Rs 5,410 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18. Bajaj Auto said it incurred a one-time charge of Rs 32 crore in payment to dealers to compensate for losses incurred on pre-GST inventory held as on 30 June.

For dealers holding stocks as of June 2017, the estimated loss per motorcycle was around Rs 1,400 per vehicle as CST, auto cess, entry tax, and LBT would not be eligible for set-off under rules for transition to GST. The company said June quarter results were to be read in light of two events: changing from BS III to BS IV compliant vehicles and transition to GST that impacted the domestic industry in general and the company in particular.

In case of international business, sales volume mix for high-end motorcycles rose to 30 per cent against 25 per cent in Q4 and 26 per cent in Q1 FY17.

“Going forward, with potential to bring back stock levels within the network, introduction of new variants and steps initiated on mass communication and ground field activities, performance for Q2FY18 is anticipated to be much better,” Bajaj Auto said in a statement.

Bajaj Auto’s surplus cash and cash equivalents increased to Rs 13,256 crore from Rs 12,368 crore on sequential basis.

HDFC Securities expects domestic motorcycle volumes to improve in Q2 with the ramp-up of Bajaj V12/V15, Dominar 400, new variants of the KTM/ Pulsar and a pick-up in two-wheeler rural demand.