Bajaj Auto’s Q2 net profit up 20% but analysts expect more pain in exports

• Bajaj Auto’s quarterly revenue from operations surpassed the ₹10,000 crore milestone for the first time.
• Its operating margin expanded 100 basis points from the previous quarter.
• Its domestic sales rose but exports fell due to deteriorating macros in overseas markets.
• Analysts expect more turbulence ahead in its exports business amid a slowdown in a few geographies.

Pune-based Bajaj Auto reported a 20% rise in the second-quarter net profit to ₹1,530 crore from ₹1,274 crore a year earlier. On a sequential basis its net profit went up by 30% due to rise in realisations and currency gains.

Total revenue from operations for the quarter grew 16% to ₹10,202 crore from a year ago. On a quarter-on-quarter basis, it rose 28% in the July-September quarter. The company surpassed the ₹10,000 crore quarterly revenue milestone for the first time.

Analysts believe that Bajaj Auto reported healthy performance in 2QFY23, but expects turbulence ahead in its exports business amid a slowdown in a few geographies.

“In view of significant cut in high margin exports business, slower recovery in domestic business, market share loss domestically and in overseas coupled, at present we have SELL rating on BJAUT, while post management's commentary on exports outlook, we would revisit our recommendation,” said Mitul Shah, head of research at Reliance Securities.

The company informed exchanges that this was a record quarter with revenue and EBITDA. According to the company, “At ₹10,203 crore, quarterly revenue from operations surpasses the ₹10,000 crores milestone for the first time.”

Its operating margins also expanded 100 basis points from the previous quarter. Baja Auto said that operating margin rose 100 basis points led by judicious price increases, dynamic cost management and better foreign exchange realisation.

Particulars	Q2 FY23	Q1 FY23	Q2 FY22
Total revenue	₹10,202 crore	₹8,004 crore	₹8,762 crore
Net profit	₹1,530 crore	₹1,173 crore	₹1,274 crore
EBITDA margin	17.2%	16.2%	16.0%

(Figures on a standalone basis)

The company’s domestic sales have doubled compared to the previous quarter across two- wheeler and three-wheeler segments. However, its exports witnessed a drop due to “deteriorating macros in overseas markets”, the company said.

Further, improvements in semiconductor supplies have helped the company build good inventories for the festive season. “Continued improvement in semiconductor supplies enabled a healthy build-back of channel inventory, ahead of the festive season,” said the company.

Particulars	Q2 FY23 (in units)	Q1 FY23 (in units)	Q2 FY22 (in units)
Domestic
Two wheeler	6.21 lakh	3.14 lakh	4.88 lakh
CV	73,241	38,418	44,068
Sub total	6.94 lakh	3.52 lakh	5.32 lakh
Exports
Two wheeler	3.97 lakh	5.32 lakh	5.41 lakh
CV	58,737	48,070	70,424
Sub total	4.56 lakh	5.80 lakh	6.12 lakh

Shares of Bajaj Auto rose more than 1% in early trade but the stock closed 1% lower at the end of the day, ahead of its earnings announcement.

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