Bajaj Auto Q3 profit skids 22% on tepid sales, shrinking margin

Bajaj Auto Ltd saw its profit after tax for the third quarter of 2021-22 plummet 22% on a standalone basis from a year earlier, as the company battled a decline in sales owing to sagging economic conditions and rising input costs. 

Net profit fell to Rs 1,214 crore for the quarter ended December 31 from Rs 1,556 crore a year earlier.

The bike maker said standalone turnover of Rs 9,294 crore during the third quarter ended December 2021 was flat when compared with Rs 9,279 crore a year earlier. 

The results come at a time when Bajaj Auto faces tough competition from the likes of Ola, which have entered the electric two-wheeler vehicle segment, apart from its traditional rivals such as Hero MotoCorp and TVS Motor.

Bajaj Auto’s standalone earnings before income tax, depreciation and amortization (EBITDA), operating profit and profit before tax declined 20%, 21% and 23%, respectively, during the third quarter as against the year ago period.  

On a sequential basis, however, the company said its EBITDA margins were up owing principally to a positive net impact of price increase and less material cost increase as well as favorable export realisation for the US dollar- Indian rupee exchange rate.

Other key highlights:

1) Sequentially, EBITDA margins improved from 15% (adjusted) in Q2 to 15.6% in Q3.

2) The company had surplus cash and cash equivalent of Rs 17,883 crore at the end of Q3 versus Rs 17,526 crore three months before.  

3) During Q3, it sold over 1.18 million units in India and across the globe.

4) Domestic sales volumes on a year-on-year basis were down 16% during the third quarter.

5) Export sales volumes were down 4% on a year-on-year basis during the third quarter.

6) Overall sales were down 10% on a year-on-year basis during the third quarter.

Management commentary

Bajaj Auto said that in the domestic motorcycle market, the industry recorded a decline of 23% during the quarter from a year earlier. In contrast, the company said it fared marginally better recording sales of over 469,000 units, a decline of 20%. 

Bajaj Auto said its market share improved to 19.2% in Q3 from 18.6% a year earlier and 18.1% in FY21. 

“In the domestic commercial vehicle market, industry recorded a growth of 5% over Q3 of FY21. In contrast, Bajaj Auto recorded a growth of 52% and reported market share of 71%, continuing its leadership position across the three product categories in this segment,” the company said. 

“Exports continue to record strong sales with average monthly volumes in excess of 219,000 units. For the calendar year 2021, exports, by volume exceeded 2.5 million units - highest ever,” the company said.