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Bajaj Auto Q2 preview: Ebitda may rise up to 34% YoY, margins seen flat

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Q2 preview: Two-wheeler major is scheduled to announce its July-September quarter result for fiscal year 2022-23 (Q2FY23) on Friday, October 14. Brokerages tracking the company expect it to report a double digit sequential growth in net profit on the back of healthy volume-based sales during the quarter. Profit margin, however, is projected to be flat due to lagged impact of falling input costs, and unfavourable product mix.


“Domestic demand for two-wheelers is showing signs of a recovery, whereas exports remain weak. Moreover, may see the entire benefit of a correction in raw material cost, and a weaker foreign exchange rate to reflect in Q3FY23,” noted Motilal Oswal Financial Services.


During the three months to September, the stock of the company, engaged in the business of development, manufacturing, and distribution of automobiles such as motorcycles, commercial vehicles, and electric two-wheelers, fell around 5 per cent. In comparison, the Nifty50 climbed 8.3 per cent, while the Nifty Auto index added 8.5 per cent, data by ACE Equity showed.


Here’s what key brokerages expect:


Motilal Oswal Financial Services


The brokerage expects Bajaj Auto to report total revenue of Rs 9,942.7 crore for Q2FY23, on the back of sales of 1,151,000 units. With this, it expects realization per unit to be Rs 8,638.2.


Ebitda (earnings before interest, tax, depreciation, and amortization), and net profit, meanwhile, are projected at Rs 1,682.1 crore, and Rs 1,454.7 crore. This would be 33.5 per cent, and 25 per cent higher, respectively, on a year-on-year (YoY) basis.


It expects Ebitda margin to improve to 16.9 per cent vs 16.2 per cent QoQ, driven by price hikes, a weak US dollar- Indian rupee exchange rate, and operating deleverage.


Prabhudas Lilladher


The brokerage forecasts revenue growth of 21 per cent QoQ, and 10.4 per cent YoY at Rs 9,675.1 crore, led by 23 per cent sequential increase in volumes. It expects merely 30bps of improvement in Ebitda margin as the export volumes were affected in the quarter, which led to a poor product mix.


Overall, Ebitda is pegged at Rs 1,596.4 crore vs Rs 1,401.1 crore YoY, and Rs 1,297 crore QoQ. This would be a growth of 14 per cent on year, and 23 per cent sequentially.


PAT, on the other hand, is seen at Rs 1,391.3 crore as against Rs 1,274.6 crore YoY, and Rs 1,173.3 crore QoQ, translating into improvement of 9 per cent YoY, and 18.6 per cent QoQ.


Edelweiss Securities


It anticipates total revenue to come in at Rs 10,016.5 crore for the period under study, up from 8,680.3 crore YoY (15 per cent), and Rs 7,768.9 crore QoQ (29 per cent). Ebitda is seen at Rs 1,618.3 crore, and PAT at Rs 1,446.4 crore.


Kotak Institutional Equities


The brokerage expects revenues to increase by 20 per cent QoQ (10 per cent YoY) to Rs 9,632 crore, led by 23 per cent QoQ increase in volume, and 2 per cent QoQ decline in average selling price (ASPs) due to lower mix of spares segment and higher mix of domestic economy motorcycle segment, partly offset by higher mix of three-wheeler segment.


“Volumes increased by 23 per cent sequentially in Q2FY23 led by 98 per cent QoQ increase in domestic two-wheeler volumes due to improvement in chip availability and inventory build-up before the festive season, and 35-71 per cent QoQ increase in domestic and three-wheeler export segments, partly offset by 25 per cent QoQ decline in two-wheeler export volumes due to slowdown in demand in African two-wheeler market,” the brokerage said.


It foresees Ebitda at Rs 1,561 crore, and net profit at Rs 1,391.4 crore.


“We expect Ebitda margin to remain flat on a sequential basis in Q2FY23 due to lagged impact of RM inflation, lower spare part mix, and higher mix of domestic economy motorcycle segment, and lower mix of export two-wheeler segment, partly offset by higher mix of three-wheeler segment, and operating leverage benefits,” it added.

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