Bajaj Auto Q1 preview: Bajaj Group’s car arm, Bajaj Auto, is all set to report its June quarter (Q1FY22) outcome on Thursday, July 22. Given the subdued quarter on weaker volumes and rising commodity price pressures, analysts anticipate the business’s efficiency to take a sequential hit at the same time as year-on-year (YoY) numbers might present spectacular development owing to low base of Q1FY21.
“The auto industry broadly encountered healthy demand conditions in Q1FY22 barring May, where state-specific lockdowns amid Covid resurgence played spoilsport. Topline performance is expected to be slightly better than industry volume trends given broad-based price hikes but margins are seen declining across the board amid no respite in commodity cost inflation (metals, rubber, plastics),” famous analysts at ICICI Securities.
That mentioned, inside the universe, Bajaj Auto is anticipated to outperform the business common because it has a major publicity to exports, the place wholesome international auto demand within the US/EU would probably assist the earnings. On the bourses, the inventory of the Bajaj Group unit has zoomed 12.5 per cent in three months to June as in opposition to a 6 per cent achieve within the benchmark S&P BSE Sensex. The S&P BSE Auto index, in the meantime, was up 7 per cent through the interval.
The brokerage expects income development of 142 per cent YoY, however down 13 per cent sequentially, at Rs 7,456.4 crore led by quantity development of 12 per cent on 12 months. Operationally, earnings earlier than curiosity, tax, depreciation, and amortisation (Ebitda) margins might decline 240bps QoQ to fifteen.6 per cent on increased commodity costs, partly offset by worth hikes and a pointy soar in exports combine over the March quarter of FY21.
BAU had reported income of Rs 3,079.2 crore in Q1FY21 and Rs 8,596.1 crore in Q4FY21 whereas Ebitda margins have been 13.3 per cent and 17.7 per cent, respectively.
Total gross sales quantity of 10.06 lakh models (down 14 per cent QoQ) with product combine remaining unchanged sequentially could assist Bajaj Auto report a comparatively regular efficiency in Q1FY22, opines the brokerage. Total working earnings, it says, is anticipated to say no by 14 per cent QoQ to Rs 7,394 crore, with blended ASPs flattish QoQ at Rs 71,917/unit. Ebitda is anticipated at Rs 1,173 crore with corresponding margins at 15.1 per cent, down 260 bps QoQ on the anticipated improve in all price heads.
Given this, the following profit after tax (PAT) is anticipated at Rs 1,093 crore, down 17.9 per cent QoQ however up 107 per cent YoY. The similar was Rs 1,332.1 crore in Q4FY21 and Rs 528 crore final 12 months.
According to the brokerage, whereas auto demand will profit from the anticipated pick-up in financial development, the pent-up demand has been low within the present unlock part vis-à-vis final 12 months on account of increased gas costs (up 40 per cent YoY) and worth hikes taken by car producers. That mentioned, at the same time as two-wheeler demand has been tepid, it believes Bajaj Auto will stay resilient on account of a diversified geographic presence.
It pegs the corporate’s Q1FY22 internet profit at Rs 1,190 crore, up a stellar 126 per cent over the earlier 12 months interval, however down 10 pe cent QoQ. Revenue is seen rising 145 per cent YoY to Rs 7,540 crore and Ebitda margin is projected at 157.4 per cent.
For Bajaj Auto, whole volumes degrew 14 per cent QoQ however exports grew 2 per cent and have been at 64.5 per cent of total gross sales. This impacts the ASP however is favorable for margins. We anticipate QoQ ASP/Revenue/PAT degrowth at 1.5 per cent/15 per cent/14 per cent, respectively. Further, we anticipate Ebitda margin at 17.3 per cent, down simply 80bp QoQ, on the again of higher exports.
Nirmal Bang Institutional Equities
In-line with different brokerages, the agency expects Bajaj Auto’s Ebitda margin to say no by 90bps QoQ (to 16.8 pe cent) on account of detrimental working leverage. However, profitability is anticipated to be supported by a greater combine (exports/3Ws), worth hikes and cost-control measures. Overall, the bottomline is pegged at Rs 1,140.3 crore whereas income and Ebitda earnings is seen at Rs 7,513.7 crore and Rs 1,258.5 crore, respectively.