Bajaj Auto Q1FY21 revenues likely to drop 60% y-o-y

Mumbai: Bajaj Auto Ltd is expected to report a sharp decline in its June quarter revenues and profit after tax (PAT) due to the covid-led disruptions in the domestic as well as the export markets.

While Q1 was marred by uneven production schedules due to plant shutdown during April, June recorded a sharp recovery sequentially on the back of robust farm produce and pent-up demand coming from the rural and semi-urban markets.

Bajaj Auto’s total vehicle sales during the forgettable quarter were at 443,103 units, down 64% from 1,247,174 units sold in the domestic and export markets during the year-ago period.

According to HDFC Securities, reduced vehicle sales would lead to a 60% decline in the quarterly revenues year-on-year (y-o-y) and 55% drop on quarter-on-quarter (q-o-q) basis. The brokerage expects that the company’s operating margins at 16.9% would contract by 150 basis points q-o-q but improve by 150 basis points y-o-y, and the PAT would decline by 37% y-o-y for the period.

A report by Emkay Global Financial Services points at decline of 61% y-o-y and 55% q-o-q in the company’s quarterly revenues. It estimates that the earnings before interest, taxes, depreciation and amortization, or Ebidta, would contract 66% y-o-y, down 222bps, and PAT would drop 44% y-o-y and 52% q-o-q during Q1FY21.

The company’s overall two-wheeler sales for the June quarter declined 63% from 1,082,627 units during Q1FY20 to 399,929 units during Q1FY21 as several regional markets remained under the lockdown for about 40 days, including the access to the ports for export shipments.

While the company’s domestic two-wheeler sales dropped 70% y-o-y at 185,981 units during the June quarter, exports fared relatively better. It exported 213,948 motorcycles during the quarter, down 55% from 471,691 units sold during the year-ago period.

Bajaj Auto, also India’s largest three-wheeler manufacturer, saw its domestic volumes drop 94% during the June quarter to 5,282 units. The overall commercial vehicle volumes, including exports, for the quarter stood at 43,174 units, down 74% y-o-y.

ICICI Securities expects 16% q-o-q increase in realizations on account of BSVI price hikes, higher export realizations, mainly aided by the rupee depreciation.

“We expect gross margins to increase 382bps YoY, Ebidta to decline 69% YoY and PAT to drop 48% YoY,” the brokerage said in a report.

According to the brokerages, key factors impacting September quarter results would be the management’s outlook of the three-wheeler business, impact of downtrading to more affordable vehicles in the portfolio and revival in the domestic as well as key export markets.