Bajaj Auto is making more money on every vehicle sold — but it is selling too few to grow its profit
- Bajaj Auto reported around 19% fall in its standalone net profit to ₹1,138.20 crore for the second quarter ended June 30.
- The overall revenue declined 7% year-on-year to ₹7,155.86 crore during the period, the company said.
- The company highlighted that excluding the impact of Merchandise Exports from India Scheme (MEIS) incentives cap by the government, margin could have improved to 19%.
Bajaj Auto reported around 19% fall in its standalone net profit to ₹1,138.20 crore for the second quarter ended June 30. The overall revenue declined 7% year-on-year to ₹7,155.86 crore during the same period.
|Bajaj Auto||Q2 Growth (YoY)|
The company acknowledges the turnaround in domestic two-wheelers is driven by pent-up demand. However, the revival in domestic CV volumes are dependent on the ‘return of adequate short distance mobility demand.’
Capping of MEIS incentives took a toll on its margins
Although Bajaj Auto’s margin expanded to 18.2%, nearly 1.3% higher than last year. The company said that the reversal of Merchandise Exports from India Scheme (MEIS) incentives led to an impact of ₹78 crore, excluding which their margin would have been at 19%.
Bajaj Auto is among the largest beneficiaries of the scheme. The company told Financial Express that it received up to ₹20 crore per month and got over ₹230 crore under the MEIS in FY20.
Festive season to drive sales ahead
With the arrival of the festive season, Bajaj Auto is also betting on a sharp rise in sales figures. The company in its earnings report said the festive spike is awaited and the “early signs show (strong) indications of a recovery.” They have maintained their market share at 18.2% in the first half of this fiscal year.
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