Bajaj Auto net profit rises to 590 crore

Bajaj Auto, India’s second largest motorcycle maker, has posted a net profit of Rs. 590.2 crore for the first quarter ended June, 2010, meeting market expectations.

Two-wheeler makers are riding on the rebound from the economic growth, which was seen in the results of TVS Motors too, on Wednesday.

Bajaj Auto posted a 66.4 per cent growth in net sales at Rs. 3,890 crore compared to the same period of the previous year. However, analysts are a little concerned over the falling margins. EBITDA - earnings before interest, taxes, depreciation 20 per cent compared to about 23 per cent during the quarter ended March, 2010.

Surjit Arora, auto analyst of Prabhudas Lilladher called it “ spectacular numbers driven by volumes.”

“The company reported a good set of numbers on account of 69.5 per cent year- on- year (YoY or compared to the same period of the previous year) volume growth,” Arora added.

Vaishali Jajoo, auto analyst of Angel Broking said the overall volumes during the quarter were driven by the new models introduced during the last one year, boosting the market share of Bajaj Auto. The company currently enjoys a 33 per cent market share in the twowheeler During the June quarter, domestic as well as export motorcycle volumes surged 70 per cent to a total of 828,000 units. In the three- wheeler category, while domestic volumes were flat at 38,000 units, exports rose 140.7 per cent to 61,000 units.

Vineet Hetamasaria, auto analyst of PINC Research was of the view that the disappointment at the margin level was compensated by the higher other income. Other income grew 3.5 times to Rs. 81.7 crore.

Rise in raw material cost by 1.90 per cent QoQ, coupled with a 0.70 per cent QoQ increase in employee expenses, led to a 2.90 sequential decline in EBITDA margins at 20 per cent.