Ba­jaj Auto’s Q3 Net Falls 5.3%, but Beats Ex­pec­ta­tion

The Economic Times - - Brands: Creating Desire - Our Bureau

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.

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