MUMBAI/PUNE: Bajaj Auto, India’s second-largest motorcycle maker, on Tuesday said its fiscal third quarter net profit almost tripled, as strong
sales buoyed by an improving economic scenario more than offset a sharp rise in input costs. The Pune-based Bajaj group flagship said net profit in the October-December period rose to Rs 475 crore, from Rs 164 crore last year. Its revenue in the same period surged 57% to Rs 3,295 crore.
The quarter saw an increase in cost of raw material, mainly steel and in the price of components. “However, due to higher volumes and by leveraging fixed cost and cost management, we were able to achieve operating margin at 22% during the third quarter, against 14.5% last year,” said finance vice-president Kevin D’sa.
Bajaj Auto, which competes strongly with market leader Hero Honda in the high margin two-wheeler market, sold 809,218 units in the third quarter, a 64% jump over the previous year. The robust sales reflected a turnaround in the economic situation, which had been hit adversely in 2008, as tight liquidity and slow demand dented auto sales.
Analysts said this has been Bajaj Auto’s best quarter, surpassing even the second quarter. The strategy to focus on ‘bigger and sportier’ motorcycles helped the company grow its market share, they said. “The results weren’t surprising and reflects the underlining efforts of the company in regaining lost market share,” said Mahantesh Sabarad, an analyst at Centrum Broking.
Apart from increased market share, Bajaj Auto has been able to boost its cash flow. Mr D’sa said it has surplus cash and cash equivalents of Rs 2,625 crore, against Rs 933 crore as on March last year. Shares of Bajaj Auto ended 1.7%, up at Rs 1,698.10 on BSE on Tuesday. After countering the slow demand scenario last year, Indian two-wheeler makers have focused on the growing rural market through bigger products, which has helped in increasing volumes and margins.
A Bajaj Auto executive said while the shift away from 100cc economy motorcycles initially did put pressure on sales, it has paid in terms of market share and profitability. Industry sales in the motorcycle segment rose by 37%, while Bajaj Auto sales rose 72% at 7.11 lakh units. The newly-launched Pulsar 135 LS is expected to add to the company’s market share in motorcycles and enable the Pulsar brand reach one million-a-year in sales. During the third quarter, Bajaj Auto also launched upgraded versions of its three-wheeler passenger carriers. Exports rose 27% to 2.73 lakh units.
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sales buoyed by an improving economic scenario more than offset a sharp rise in input costs. The Pune-based Bajaj group flagship said net profit in the October-December period rose to Rs 475 crore, from Rs 164 crore last year. Its revenue in the same period surged 57% to Rs 3,295 crore.
The quarter saw an increase in cost of raw material, mainly steel and in the price of components. “However, due to higher volumes and by leveraging fixed cost and cost management, we were able to achieve operating margin at 22% during the third quarter, against 14.5% last year,” said finance vice-president Kevin D’sa.
Bajaj Auto, which competes strongly with market leader Hero Honda in the high margin two-wheeler market, sold 809,218 units in the third quarter, a 64% jump over the previous year. The robust sales reflected a turnaround in the economic situation, which had been hit adversely in 2008, as tight liquidity and slow demand dented auto sales.
Analysts said this has been Bajaj Auto’s best quarter, surpassing even the second quarter. The strategy to focus on ‘bigger and sportier’ motorcycles helped the company grow its market share, they said. “The results weren’t surprising and reflects the underlining efforts of the company in regaining lost market share,” said Mahantesh Sabarad, an analyst at Centrum Broking.
Apart from increased market share, Bajaj Auto has been able to boost its cash flow. Mr D’sa said it has surplus cash and cash equivalents of Rs 2,625 crore, against Rs 933 crore as on March last year. Shares of Bajaj Auto ended 1.7%, up at Rs 1,698.10 on BSE on Tuesday. After countering the slow demand scenario last year, Indian two-wheeler makers have focused on the growing rural market through bigger products, which has helped in increasing volumes and margins.
A Bajaj Auto executive said while the shift away from 100cc economy motorcycles initially did put pressure on sales, it has paid in terms of market share and profitability. Industry sales in the motorcycle segment rose by 37%, while Bajaj Auto sales rose 72% at 7.11 lakh units. The newly-launched Pulsar 135 LS is expected to add to the company’s market share in motorcycles and enable the Pulsar brand reach one million-a-year in sales. During the third quarter, Bajaj Auto also launched upgraded versions of its three-wheeler passenger carriers. Exports rose 27% to 2.73 lakh units.
source-http://economictimes.indiatimes.com
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