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%.
AdvertisementOne of India’s largest automaker Bajaj Auto’s earnings reflect the pain of weak demand for its high margin 3-wheeler category, despite record growth in its exports and two-wheeler segment. This is the first full quarter of operations after India eased the lockdown restrictions.
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.
SEE ALSO: Former Tesla CIO raises $150 million for his SaaS automotive retail startup, enters the unicorn club
Kumar Mangalam Birla says cement industry is recovering and analysts find evidence of it outside UltraTech too
Uber Bus in India soon? Head of Mobility in APAC says he is ready to import the Egypt experiment
Sadhguru’s advice: Government should give tax relief for sustainable businesses
Popular on BI
- Avatar 2, Black Panther 2, Ant Man — Here is a complete list of Hollywood movies expected to hit Indian theaters in the next 6-7 months
- Xiaomi’s new foldable wants to take on the Samsung Galaxy Z Fold 4 with a cheaper price tag
- Here’s why Nasa scientists are sending microorganisms around the moon
- A new study documents first human-to-dog transmission of Monekypox virus in France
- Vedanta partners with IIT-B to develop green steel technology