Bajaj Auto Q4 net profit rises 10% but that’s not really a reason to cheer

Bajaj Auto managed to report a 10% on-year rise in January-March net profit to Rs 1,469 crore, mainly due to an exceptional profit of Rs 315 crore during the quarter. 

The exceptional item related to receivables from the Maharashtra government under the Package Scheme of Incentive for the period April 2015 to March 2021.

This also helped the company beat the profit estimate of Rs 1,026 crore by Kotak Institutional Equities.

The company's standalone revenue fell 7% on year to Rs 8,264 crore during the quarter, as two-wheeler volumes fell 18%.

Most two-wheeler companies in India have been facing the double-whammy of supply-chain disruption due to a shortage of semiconductors, and a weak rural demand.

The effect of a rise in raw material cost could be seen on the company's earnings, despite the hike in prices of various models. Bajaj Auto's operating margin contracted to 17.5% in January-March from 18.1% a year ago. However, the margin improved sequentially from 15.6% during October-December.

The figures for the full fiscal ended March were more sanguine with the maker of Pulsar model of motorcycle achieving its highest ever annual turnover and exports.

The turnover grew 18% to Rs 34,354 crore in FY22 while profit after tax rose 10% to Rs 5,019 crore. But here again, the impact of a rise in raw material cost could be seen with the full year operating margin contracting to 16.3% from 18.3% in the preceding year.

OTHER KEY HIGHLIGHTS

1) The board recommended a dividend of Rs 140 per share.

2) Price increase, improved US dollar realisation and favourable sales mix helped mitigate the impact of rise in costs.

3) As on March 31, 2022, surplus cash and cash equivalents stood at Rs 19,090 crore.

4) On a full year basis, share for motorcycles sold in the domestic market marginally improved to 18.2%.

5) Domestic commercial vehicle business grew 47% in FY22.

6) International business recorded highest-ever sales of over 2.5 million vehicles in FY22, valued at over US$2 billion.

7) Exports contributed over 52% of net sales.