Bajaj Auto Reports 42% Increase In Profit Due To Commercial Vehicle Sales In Q1

Bajaj Auto beat expectations on Tuesday, reporting a nearly 42 per cent increase in first-quarter profit on robust domestic demand for its commercial vehicles even as weak exports continued to drag sales.

Demand pick-up in rural areas and a prolonged wedding season in the country amid some ease in inflation helped automakers log gains during the quarter.

Profit rose to Rs 1,665 crore for the quarter ended 30 June, compared with analysts' expectations of Rs 1,641 crore, according to IBES data from Refinitiv.

Sales of commercial vehicles, which include three-wheeler auto-rickshaws and mini pick-up vans, more than doubled in the domestic market, while two-wheeler sales grew 73 per cent.

This helped the Pulsar motorcycle maker book a total revenue increase of nearly 29 per cent to Rs 10,310 crore.

However, exports of two-wheelers and commercial vehicles fell for a second consecutive quarter by around 34 per cent from a year ago, as persisting macroeconomic headwinds affected its overseas markets.

"The most stifling factor on our exports business is the strained dollar liquidity across countries," Dinesh Thapar, Bajaj Auto's chief financial officer, said in a post-earnings call.

"The macroeconomic challenges that we are seeing - most prominently the scarcity of dollars, raging inflation, and political instability - will create short-term pain," Thapar added, talking about overseas markets.

"Although, in the longer term, it might still play out effectively."

The value of foreign sales was diminished by a stronger dollar as the US Federal Reserve embarked on the fastest interest rate hike cycle in four decades to curb red-hot inflation.

Exports had fallen by 41 per cent in the March quarter, dragging profit growth to 2.5 per cent from 10 per cent a year earlier.

In April, UK-based Triumph Motorcycles announced it would transfer its distribution operations within India to Bajaj Auto, as overseas motorcycle makers began eyeing India's premium motorcycle market.

Rival TVS Motors also beat expectations on Monday on strong demand, while Hero MotoCorp, the world's largest two-wheeler maker by sales, will report on 10 August.

Shares of Bajaj Auto traded about 1 per cent down on Tuesday. The stock climbed about 20.8 per cent in the quarter compared to a 23.7 per cent rise in the Nifty auto index.