Bajaj Auto Q1 net dips 5.6% on higher costs

MUMBAI: Bajaj Auto Ltd’s profit fell for the third straight quarter because of higher raw material costs and the switch to the stricter Bharat Stage-IV (BS-IV) emission norms.

The maker of Pulsar and Discover motorcycles on Thursday reported a net profit of ₹924 crore in the quarter ended June 30, a 5.6% drop from ₹978 crore a year ago. Net revenue fell 3.8% to ₹5,854 crore against ₹6,088.75 crore in the year-ago period.

Bajaj Auto’s earnings lagged estimates. The company had been expected to post a profit of ₹907.70 crore on net sales of ₹5,499.40 crore, according to Bloomberg analyst surveys.

The Pune-based company said it incurred a one-time charge of ₹32 crore in payments to dealers for inventory they held as of June 30, before the roll-out of the Goods and Services Tax (GST) the following day. A sharp drop in sales volume in the domestic market, coupled with higher raw material costs, dragged down the Ebitda (earnings before interest, tax, depreciation and amortisation) margin to 18.3% from 20.5% in the same quarter last fiscal. Motorcycle and commercial vehicles sales in the domestic market fell 23% to 478,909 units from a year ago. Exports that had declined for the past five quarters snapped the trend, rising 10% to 409,525 units.

S Ravikumar, president of business development at Bajaj Auto, expects sales volume to remain under pressure for another couple of months.