Release Date: October 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bajaj Auto Ltd (BOM:532977, Financial) reported record revenues of INR13,000 crores, a 22% growth driven by domestic exports and spare part sales.
- The company achieved a record EBITDA of INR2,653 crores, growing at 24% and maintaining a 20% EBITDA margin for the fourth consecutive quarter.
- The green energy portfolio, including electric and CNG vehicles, now constitutes 44% of domestic revenue, showcasing strong growth in sustainable segments.
- The LATAM region led export growth with a 20% year-on-year increase, consolidating leadership in key markets like Mexico.
- The domestic motorcycle business maintained a strong position in the 125 CC plus segment, with a market share of 25%, just 2% short of leadership.
Negative Points
- Africa continues to decline across major markets, with a 9% decrease, impacting overall export performance.
- The company faced a one-time exceptional deferred tax provision of INR211 crores due to changes in tax regulations, affecting profit after tax.
- The consolidated profit was impacted by a significant loss from the associate Pierer Mobility, amounting to INR580 crores.
- The festive season demand was muted, with the motorcycle industry showing only 1% to 2% growth, below expectations.
- The electric vehicle segment, while growing, is still margin dilutive, impacting overall profitability.
Q & A Highlights
Q: What is the current status and future outlook for the CNG network in India, particularly concerning the Freedom 125 motorcycle?
A: Rakesh Sharma, Executive Director, explained that the wait period for refueling at CNG pumps is minimal, often just minutes or seconds. The strong support from gas distribution companies has facilitated this. As the scale of operations increases, more dispensing stations are expected to be added to maintain efficiency.
Q: How does the network coverage for electric three-wheelers compare to that of ICE three-wheelers, and what is the growth potential?
A: Rakesh Sharma noted that electric three-wheelers are now available in 700 locations, covering 90-95% of the industry. The total reach for three-wheelers is around 1,000-1,100 stores, indicating significant coverage and potential for organic growth.
Q: Can you explain the increase in raw material costs and its impact on margins, particularly concerning electric two-wheelers?
A: Dinesh Thapar, CFO, stated that the largest drag on margins was the expansion of the Chetak electric scooter. The PLI incentive is being accounted for, and while the electric portfolio is EBITDA flat, the enterprise operates at a 20% margin, reflecting the impact on gross margins.
Q: How has the festive season demand been for Bajaj Auto, and what is the outlook for the industry?
A: Rakesh Sharma mentioned that the festive season demand has been muted, with the motorcycle industry showing only 1-2% growth. The 100 CC segment is in decline, while the 125 CC plus segment is marginally positive. The overall industry growth is expected to be around 3-5%.
Q: What are the plans for expanding the Chetak electric scooter range, and how are margins expected to evolve?
A: Dinesh Thapar indicated that new Chetak models will be launched from mid-November onwards, with improvements in cost structures expected. The focus remains on achieving leadership in the electric two-wheeler segment, with margins improving as cost reductions are realized.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
