InvestorQ : Why did the Bajaj Auto results disappoint the markets on Thursday?
diksha shah made post

Why did the Bajaj Auto results disappoint the markets on Thursday?

2 years ago

You cannot really classify Bajaj Auto results as bad because you need to appreciate that the company is just about coming out of the June quarter COVID effect. Let us first look at the numbers announced by Bajaj Auto on Thursday.

The auto maker reported 19% fall in its net profit at Rs.1138 crore for the Sep-20 quarter. According to the management, while Bajaj has recovered from the COVID impact, this fall was more due to lower treasury income and government restrictions on export benefits.

Sales revenues for the quarter fell by 8% at Rs.7442 crore. The company also admitted that the fall in operating profits could have been worse than the reported 7% in the quarter had it not been for some strategic fixed cost optimization undertaken by the company.

There was some pressure on volumes. The total volumes sold were 10% lower in the quarter at 1.053 million. However, the December quarter is expected to show much better traction on the back of festive demand which includes the Dussehra and Diwali seasons.

It may be recollected that Bajaj has the strongest export franchise among two-wheeler manufacturers and the company has reported record export sales of 212,000 units in the month of September 2020. In terms of regions, while Africa and Latin America are reviving, ASEAN continues to see tepid demand. Sri Lanka demand has been virtually zero.