Bajaj Auto’s Q3 Net Falls 5.3%, but Beats Expectation
Mumbai: Led by sales decline in both domestic and export market, Bajaj Auto, the country’s largest two-wheeler exporter, posted a 5.3% decline in net profit for the quarter ending December 31, 2016. The third quarter results, however, beat street expectations of a steeper fall in profit. The company had a consolidated net profit of ₹ 976.82 crore versus ₹ 1,031.17 crore in the same quarter last fiscal. Its turnover slid to ₹ 5,673 crore due to 10.49% fall in volumes. The company however held onto its fabled EBIDTA margins, which stood at 22% thanks to higher realisation during the quarter, especially driven by favourable currency and rich product mix.
Despite the fall in volumes, the company's strategy of operating on a variable cost structure, coupled with an improvement in realisation per US dollar helped in maintaining the operating EBIDTA margin, the company said in a statement to exchanges.
"External factors such as economic crises and constraints in availability of foreign currency, amongst others continue to drag the performance. Nigeria is yet to witness a market recovery, countries like Egypt are still plagued with availability of US dollar currency and sales in Iran was disrupted on new vehicle related norms,” added the statement.
Much like the market, Bajaj Auto got impacted by demonetisation, but the decline was lower than the market at 3% in Q3. Plus the premium portfolio of Bajaj Auto which is majorly city centric, saw a lesser impact, when compared to mass market100 cc bikes, which has a big rural penetration. The decline in the exports market was steep at 18% due to turmoil in the markets of Nigeria, Egypt and Sri Lanka.