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Bajaj Auto reports healthy operating profit on increased exports but disappoints on the domestic front

Bajaj Auto has reported a 31% higher operating profit due to increased exports but vehicular sales have declined domestically as consumers feel the pinch of higher interest rates

Bajaj Auto, the Pune-based and third largest manufacturer of motorcycles (it also manufactures three-wheelers), posted robust fourth quarterly earnings. It reported 12% y-o-y increase in its net sales, for the quarter ended 31 March 2012, at Rs4,651.44 crore. It was mostly driven by higher export realisations. Exports revenues increased 40% y-o-y, to touch Rs1,477 crore for the quarter ended March 2012. It exported around 3,47,414 vehicles in the quarter, which was 26% higher than the corresponding quarter last year. This helped negate the higher costs incurred during the quarter, which increased on par with net sales.  The higher realisation led to swelling of its operating profit by 31% to Rs920.55 crore, which saw its operating profit margins grow by 288 basis percentage points to 19.79%. Its net profit was Rs772 crore for the reporting quarter, down Rs628.39 crore, from Rs1,400 crore when compared to the same quarter last year. However, this is due to an exceptional item the company recorded last year.

Bajaj Auto sells in markets which are seemingly immune to the challenging economic environment, as seen in the western world, namely—Africa and Latin America—where the market profiles are similar to the Indian market. However, it remains to be seen whether it can sustain the momentum going forward as it could be difficult to replicate the success, as global demand is more dynamic and varied than local tastes. In order to gain knowledge in international technologies, the company has tied up with KTM PowerSports AG, an Austrian motorcycle major, by investing 40.87% in the latter through its Netherlands-based subsidiary Bajaj Auto International Holdings BV.

On the other hand, it has disappointed on the domestic front, as it sold 2,602 fewer vehicles in the March 2012 quarter, compared to the corresponding period last year, with 6,69,753 being sold. The quantum of vehicles sold is one of the more broadly used indicators to gauge the economic well-being. Much of vehicular sales depend on external financing, as most middle-class consumers take loans to buy two-wheelers. However, even through the Reserve Bank of India (RBI) had cut interest rates, they are still high enough to warrant consumers to postpone purchase. Therefore, Bajaj Auto has not been an exception to the industry-wide dependence on interest rates.

It has a healthy cash balance, at Rs5,451 crore as of 31 March 2012, which is higher than Rs4,239 crore compared to the corresponding quarter last year. It has even reduced long-term liabilities by nearly 14%, to Rs414.84 crore. 

The company has recommended a dividend of Rs45 per share, which works out to a dividend yield of 2.93%, which is decent by today’s standards. 

According to the company, its motorcycles enjoy a market share of 32%. The company sells motorcycle brands such as Avenger, Pulsar and Discover.





5 years ago

My reading knowing the Company (externally) for many many years.
They are deviating serving the masses to serving the Stylists (high end). While there is nothing wrong in serving the Stylists, there is no reason to stop producing Vespa, M50 and M80.
Vespa is coming back although as origial Piaggio Vespa from them and I am sure the day is not far away when someone comes out with the equivalents of M50 and M80 which were extremely popular in the ow income group in Cities as well as Villages. The day is not far with the petrol prices as they are today.
These are different segments of the same industry and there is nothing wrong in being in multiple segments. Maruti is an example. If the sale of high end cars is down the sales of low end cars are higher.



In Reply to Ravindra 5 years ago

Kindly read Hamara Bajaj to fade into oblivion and also the comments of Veeresh Malik below that article.

No relief to bank loan defaulters

About 2,492 account-holders owing Rs1 crore and above had defaulted in 2010-11 and the total amount to be recovered is Rs25,041 crore

New Delhi: Ruling out any relief to bank loan defaulters owing Rs1 crore and above, the Indian government on Friday said all efforts will be made to recover the dues from such companies and individuals, reports PTI.

Maintaining that the government was under no pressure to waive loans of Rs one crore and above, Minister of State for Finance Namo Narain Meena said in Lok Sabha that no relief will be given to defaulters.

"Recovery is an on-going process. All loans will be recovered," Meena said during Question Hour.

He said 2,492 account-holders owing Rs1 crore and above had defaulted in 2010-11 and the total amount to be recovered is Rs25,041 crore.

Meena said banks were required to monitor non-performing assets (NPAs) and take steps to bring them down through recovery and other channels. RBI also monitors the NPA levels in banks.

"This aspect is reviewed during annual financial inspections and monitored on an ongoing basis through regulatory returns submitted by banks and periodical meetings with banks," Meena said.

The banks are also advised by RBI from time to time to take effective measures to strengthen the credit appraisal and post-credit monitoring to arrest the incidence of fresh NPAs and adopt a more realistic approach to reduce the existing and chronic NPAs in all categories.

Banks resort to write-off only after exhausting all other possible avenues for recovery or when the asset coverage is not enough, Meena said. During FY11, around Rs23,364.62 crore were written off, he added


SBI Q4 profit surges to Rs4,050.27 crore from Rs20.9 crore


For the full year to end-March 2012, SBI's net profit increased 41.6% to Rs11,707 crore

New Delhi: Country's largest lender State Bank of India (SBI) on Friday posted net profit of Rs4,050.27 crore in the fourth quarter ended March 2012, against just Rs20.88 crore recorded in same period a year ago, reports PTI.

SBI profits had taken a big hit in Q4 of 2010-11 on account of higher provisioning for bad loans and increased tax outgo.

During the quarter to end-March, SBI said its total revenues rose to Rs33,959.54 crore as against Rs26,536.84 crore in the same quarter a year ago, SBI said in a filing on the BSE.

The SBI Board has proposed a dividend of 350% or Rs35 per share for 2011-12.

For the full year to end-March 2012, the bank's net profit increased 41.6% to Rs11,707.29 crore as compared to Rs8,264.52 crore an year ago. Total revenues, including interest rose Rs1.21 lakh crore against Rs97,218.96 crore in the previous fiscal.

On consolidated basis, profit of SBI Group also rose by 44% to Rs15,343.1 crore for the year ended March 2012 compared to Rs10,684.95 crore a year ago. During the year, total revenues of the group increased to Rs1.77 lakh crore against Rs1.47 lakh crore a year ago period.

Shares of the bank was trading at Rs1,913 a piece, up 3.6% in the afternoon session on the BSE.



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