Bajaj Auto’s profit margin springs up⁠ and the Pulsar maker opts for new tax rate to widen it further⁠— the shares jump over 4%

BI India
  • Bajaj Auto’s profit rose 0.4% to ₹1,310.3 crore between January and March 2020.
  • Total domestic sales fell by a third and while exports grew 7%.
  • The company declared a dividend of ₹120 a share.
India’s largest two-wheeler and three-wheeler manufacturer Bajaj Auto’s standalone profit was largely unchanged, up about 0.4%, at ₹1,310.3 crore between January and March 2020 compared to the same time last year, in line with the estimate from the analysts at Motilal Oswal.

However, the EBITDA margin, a measure of the company’s efficiency, widened by 200 basis points in the three months ending March. A 100 basis points make for a percent.

The margin widened even though there wasn’t much respite on the cost of commodities in the fourth quarter of the last financial year. “Increasing share of 110cc vs. 100cc motorcycles,” drove the expansion in profit margin, according to analysts at the broking firm JM Financial.

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Bajaj Auto’s shares gained over a percent ahead of the earnings and added another four the morning after.

Bajaj Auto Q4 Growth (YoY)
Revenue -8.1%
Profit0.4%
Operating EBITDA Margin19% vs 17%
*EBITDA: Earnings before interest, tax, depreciation, and amortisation

Total domestic sales fell by a third and while exports grew 7%. However, the exports were largely driven by the two-wheeler segment, whereas the commercial vehicle sales abroad contracted.
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“The company intends to exercise the option permitted under Section 115BAA of the Income Tax Act 1961 to compute income tax at the revised rate of 25.17% from the current financial year,” the statement said.

Since the beginning of 2020, Bajaj Auto’s share price has taken a massive hit because of the coronavirus pandemic, subdued sales and shutting down of showrooms and factories

SEE ALSO: Bajaj Auto sales slid almost 38% in March when the COVID-19 lockdown was in place for just a week
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