Bajaj Auto Q1 consolidated net down 1% at Rs 1,012 cr, margin dips to 16%

Bajaj Auto reported a consolidated net profit at Rs 1012.17 crore for the quarter ended June 30, 2019 versus Rs 1,115.2 crore reported in the year-ago period. Consolidated total revenue from operations for the period under review stood at Rs 7,756 crore as against Rs 7627.9 crore in the year-ago quarter, it said.
Total volumes forstood  the quarter at 1,247,174 units. The company's total sales for the period under review came in at 1247,174 units. EBITDA (earnings before interest, tax, depreciation and amortisation) stood at 1,250 crore, a fall of 9 per cent YoY. Margins took a beating, falling to 16.1 per cent from 18.3 per cent y-o-y.
As on 30th June 2019, surplus cash and cash equivalents stood at Rs 17,126 crore as against Rs 16,368 crore as on 31 st March 2019, the company said in its press release.
CLICK HERE FOR THE DETAILED BREAKUP OF THE NUMBERS
Analysts at Motilal Oswal had predicted a 2.1 per cent YoY growth in Bajaj Auto's revenue to Rs 7,572.6 crore and 2.8 per cent decline in net profit to Rs 1,083.6 crore.
CLICK HERE TO SEE SEGMENT-WISE PERFORMANCE
Phillip Capital had pegged Bajaj Auto's fall in margins at 190 bps YoY to 15.4 per cent due to inferior product mix and higher discounting in domestic two-wheeler portfolio. "Ebitda may come in at Rs 1,119.3 crore," the brokerage firm had said in its result preview note

For the domestic motorcycle segment, Bajaj Auto recorded a growth of 3% in the recently concluded quarters over Q1FY19, as against an industry de-growth of 9%. The overall share in the domestic motorcycle market stood at 18.3% as against 16.3% in Q1FY19.
"In the Sports segment, the Company continues to maintain its dominance with market share of 46.9% in Q1FY20. Pulsar, along with Avenger, sold over 261,000 units, a growth of 17% over Q1FY19. The newly launched Avenger 160 has sold over 12,000 units," Bajaj Auto said in a filing to the exchanges.
Bibhishan Jagtap, an analyst at Institutional Equities IDBI Capital said the company had fared better than its peers on the volume front, but margins were a worry.
"At around 15.4 per cent, margins were obviously below everyone's expectation and are their lowest so far. On the volume front though, Bajaj Auto is doing extremely well. Their volumes are somehow in the positive territory as compared to Hero MotoCorp, Eicher and TVS Motors," Jagtap said.
Adding: "The next two months will be very difficult for the industry, and Bajaj would be no exception. As far as the second half is concerned, people expect performance to improve marginally as compared to H1CY19. Looking at all these factors, one should stay away from the two-wheeler space - not only Bajaj Auto, but the entire two-wheeler segment. Buy only on a sharp correction for the long term."

Bajaj's quadricycle Qute to take on small carmakers; set for Feb launch

Bajaj Auto is set to take on small carmakers with the launch of the Qute, a quadricycle for personal transportation, in February 2019.

An alternative to a small car, it is expected to be priced ex-showroom between Rs 260,000 and Rs 300,000, and will offer better mileage (more than 30 km a litre) and less pollution than a car, and will be a convenient alternative to a two-wheeler but at the same operating costs.
However, it can give a top speed of 70 km per hour, which is part of government regulation for this category and ideal for cities. Currently the Qute is sold only for commercial transportation, but through a notification by the government a few days ago, it has been permitted for personal transportation. The Qute for personal transportation will have some changes in its specifications from the one for commercial purposes.
Speaking on this, Rajiv Bajaj, managing director of Bajaj Auto, said: “The Qute is an affordable urban mobility solution on four wheels. Its closed body, seat belts and associated features offer a safe and more convenient alternative to the two-wheeler at an operating cost that is similar.” He also pointed out it was “way less polluting and more fuel-efficient than a car”. Bajaj said: “We are an anti-car company in that the purpose of our strategy is to provide people, particularly those in our polluted and congested cities, smarter alternatives to cars, whether two-, three- or four-wheelers.”

According to him, the company does not have to make any major tweak to its existing Qute, which is meant for commercial use, and will also look at building an electric vehicle of the same model later. The Qute will have a slightly higher price than the Maruti Alto 800, which has an ex-showroom price of Rs 256,000 in Delhi but a lower mileage of 24.7 km a litre.
ALSO READ: Discover 100-cc launch was my biggest career blunder: Bajaj Auto MD Rajiv
Bajaj said there would be no need for any additional investment to churn out the personal transportation vehicle. “We have a flexible plant that produces both our three-wheelers and the Qute, so capacity isn’t an issue.”
Asked on how many vehicles he expected to sell, Bajaj pointed out: “We will gradually ramp up production as demand builds up. We will also look to export in all the emerging markets where Bajaj three-wheelers and two-wheelers are popular.”
Car companies, however, have fought a long, bitter battle against Bajaj on the issue of permitting quadricycles as a separate class of vehicles and have insisted that if they are permitted to be used for personal transportation they should follow the same norms of emission and safety of a passenger car.
ALSO READ: Bajaj Auto's pursuit for volumes dents margins in Q2; sales up 25%
However, the government has put in different norms of emission as well as safety rules for quadricycles. Maruti Suzuki Chairman R C Bhargava said: “We have no problem of a four-wheel drive not looking like a passenger car. But the key question we had raised is that they should follow the same emission and safety norms which we as carmakers follow. The question is considering that even two-wheelers have to move to BS VI emission norms by 2020, how can quadricycles have a different emission standard?”
But Bajaj Auto points out as vehicles are of different categories, having four wheels does not make one a passenger car.
Bajaj says each category of vehicles, which include two-wheelers, three-wheelers, quadricycles and cars, has its independent standards in all regulatory matters.