Bajaj Auto: New Launches, Exports Boost Could Increase Revenue In FY25

Bajaj Auto Ltd.'s earnings surged by more than a third in the fourth quarter of fiscal 2024, on the back of higher sales and a richer product mix. While exports lagged, the domestic business more than made up for the shortfall. The company is slated to launch six models in the next few months as it looks to ride the Chetak wave.

Net profit of the Pulsar-maker rose 35.11% over the year-ago period to Rs 1,936 crore in the quarter ended March 31, 2024, on the back of revenue that was up 28.97% at Rs 11,484.68 crore, according to an exchange filing on Thursday. 

Analysts polled by Bloomberg estimated the top line at Rs 11,114 crore and the bottom line of Rs 1,844 crore in the January-March period.

• Revenue up 28.97% at Rs 11,484.68 crore (Bloomberg estimate: Rs 11,114 crore).

• Ebitda up 34.35% at Rs 2,306.25 crore (Bloomberg estimate: Rs 2,187 crore).

• Ebitda margin up 81 basis points at 20.08% (Bloomberg estimate: 19.7%).

• Net profit up 35.11% at Rs 1,936 crore (Bloomberg estimate: Rs 1,844 crore).

• Total sales up 24.25% at 10,62,426 units.

“This has been a record year for Bajaj Auto on nearly all metrics,” Dinesh Thapar, chief financial officer at Bajaj Auto, had said during a virtual press conference following the earnings.

Bajaj Auto benefitted from operating leverage, while realisation also increased, according to Executive Director Rakesh Sharma.

Despite concerns regarding exports, the management sees recovery in most markets. It has divided the export market into three key categories; stress, recovery and new markets.

While stressed markets like Nigeria and Bangladesh remain fragile due to currency fluctuation and subdued demand, management sees most countries in recovery markets doing better. Currency issues in these markets are unlike seen in Argentina but remain stressed for now, it said.

New markets like Brazil, where the company expects to start production in June, along with increased presence in Europe will be key for export growth, the management said.

In an unexpected development, Egypt has recognised quadricycles, which could bode well for Bajaj Auto as it will be exporting its auto taxi 'Qute' in the market. The company will commence the first exports of 'Qute' to Egypt within this month, management said.

This comes as exports of three-wheelers to the country took a hit following a ban imposed in 2022. Egypt was a key three-wheeler market, according to the company, and exports of the 'Qute' could help its exports.

The eventual upgradation to other modes like quadricycles could benefit the company as it has a ready product and already exports roughly 4,000 of these globally per annum. The company also highlighted that they are investing behind the product and working on electric version of the same. Currently, the 'Qute' is available in CNG.

The company received PLI certificates for all its models in three as well as two wheeler segments, which makes it eligible for incentives going forward.

Bajaj Auto had nine launches in the previous fiscal and expects to launch six models in the next few months, the management said. Among the key product launches will be the New Chetak variant, along with the biggest Pulsar and KTM in Indian market.

It is also launching the world’s first CNG motorcycles in June this year starting at Rs 80,000, the company said in its Bajaj Beyond event. The company has 9% market share in the 100cc segment and the management said it already has good technology with CNG being a mainstay in three-wheelers.  

The company is also expanding its store presence, with Chetak stores to increase from 200 currently to 600 this year. They are also expanding Triumph stores to 150.

The company currently sells 75% of all its models in 125cc and above, Sharma said. It holds 27% market share in this segment up from 22% last year. It is also now the number two player in this segment with the number one player at 29% market share.

The new CNG motorcycle will help increase presence in the lower cc segment and market acceptance is a key monitorable. The company also has a whopping 88% market share in the CNG three-wheeler space.

Brokerages said that export recovery will be a key monitorable going forward.

Nuvama has a 'buy' rating on the company, with a target price of Rs 10,340 per share. The two-wheeler volume prospects remain positive, with an estimated 9% CAGR over FY24-26, led by domestic growth (8%) and recovery in exports (11%), it said.

While, Elara Securities also had an 'accumulate' rating on the stock, with a price target of Rs 10,050 apiece. It factored in 16% volume CAGR in exports in FY24-26E, despite Africa being sub-peak.

Kotak Securities retained 'sell' rating, with target price of Rs 6,200 per share, a 30% downside from current price. Export of two-wheeler volume recovery to likely fall below expectations, it said.