Bajaj Auto registers a rise in exports and increase in revenue

Saturday 21 January 2012, 14:50 PM by

Bajaj Auto, largest two-wheeler manufacturer in India has registered favourable growth in spite of the sluggish economic conditions. This is mainly attributed to the increasing exports and devaluation of rupee. It is now aiming to expand the share of its exports further by entering newer markets.

The company recorded a rise of 19 per cent in net profit from October to December 2011 to Rs. 795 crores on year-over-year basis. Most analysts were amazed at the company’s exceptionally good performance and high margins, even though it was according to the market expectations. Bajaj Auto earns one from every three rupee gained from exports. It recorded a rise in net sales of 21.6 per cent to Rs. 4839.95 crores.

Bajaj Auto registers a rise in exports and increase in revenue |
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According to Joseph George, Analyst, brokerage IIFL Ltd., in reference to the operating margins or the earnings before interest, tax, depreciation and amortization, “The results are better than what we had expected.”

As per Kevin Dsa, President, Finance, Bajaj Auto, the motorcycle sales are not expected to grow even by 12-15 per cent, even in the last quarter, due to the low demand of two-wheelers. Nonetheless, the company’s concentration on the exports will compensate for the dismal sales and easily maintain 20 per cent profit. He further added, “We are relatively de-risked even if the market doesn’t improve.”

Profits rose 28 per cent due to the exports of two and three wheelers to 380,912. In addition, the falling value of rupee led to an increase by 51 per cent in revenue acquired from exports to Rs. 1,710 crores. As per Bloomberg, the rupee was 48.97 against U.S. dollar on 1st October, whereas on 31st December it was 53.065, leading to a fall of 7.71 per cent in the value. Bajaj Auto’s performance in the domestic market has been unsatisfactory with sales increasing only 7 per cent to 642,395 motorcycles.

According to Society of Indian Automobile Manufacturers (SIAM), in December, the two-wheeler sales in the Indian market increased 8.52 per cent to 1,091,982 from 1,006,289 on the year-over-year basis. Ajay Shethiya, Analyst, brokerage Centrum Broking Pvt. Ltd., said “The company’s product pipeline for the domestic market will be critical in volume improvement”.

Bajaj Auto is the manufacturer of popular motorcycles like Discover, Pulsar and Avenger. It has also come out with its first four-wheeler, RE 60, developed in alliance with Renault and Nissan. The company with its RE 60 aims to replace the three-wheeler auto-rickshaw used for public commuting. It is incorporated with 200cc, liquid-cooled, fuel-injected DTSi engine that will produce a maximum power of 19 hp. Bajaj Auto aims to capture a larger share of the Indian automobile market with its latest RE 60.

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