Bajaj Auto posts Rs 3,828 crore profit in FY2017, operating EBIDTA margin strong at 21.7%

Pune-based Bajaj Auto (BAL), India’s fourth-largest two-wheeler company, reported its FY2017 and Q4 FY2017 results earlier today. Attributing its performance to a difficult domestic market environment, the company has reported profit after tax (PAT) of Rs 3,828 crore, down by 2.60 percent YoY. BAL had reported PAT of Rs 3,930 crore for FY2016.

The company continues to operate at industry-leading EBIDTA margins of 21.7 percent. However, market analysts say that the margins were weaker for FY2017 due to drop in the volumes of its two- and three-wheelers along with the commodity pressures. Operating EBIDTA for FY2016 stood at 22.2 percent.

Transition to BS IV impacts PAT
For Q4 FY2017, the company has reported a PAT of Rs 802 crore (PAT Q4 FY2016: 949 crore) at operating EBIDTA margin of 21.2 percent. This can be attributed to the rise in input costs including that of the transitions from BS III to BS IV emission norms of its entire portfolio.

The company sold 3,665,950 vehicles in FY2017 compared to 3,893,581 units in FY2016, down by 5.85 percent. For Q4 FY2017 too, it has reported a decline of 9.72 percent with sales that stood at 787,627 units during the period (Q4 FY2016: 872,458 units). It is understood that an early shift to BS IV emission standards led to a subsequent price hike, making Bajaj Auto two- and three-wheelers relatively pricier as against the competition. This impacted the company in terms of a marginal decline in its sales.

Pulsar and Avenger remain strong sellers
According to an official communication from the company, BAL’s market share in the domestic motorcycle segment stood at 18 percent in FY2017. Among the top performing motorcycle brands were Pulsar and Avenger, which together sold more than 786,000 units thereby marking a growth of roughly three percent YoY.

The mass commuters – Platina and Bajaj CT100 – raked in combined sales of over 836,000 units in the last fiscal. The company document claims that Bajaj Auto commands a market share of nearly 32 percent in the entry level motorcycle segment.

The V15 model, along with its newly launched sibling V12, recorded combined sales of more than 234,000 units for the last fiscal thereby becoming a solid contributor to company’s overall annual motorcycle sales.

On the premium motorcycle front, Bajaj Auto sold more than 9,300 units of its 375cc Dominar 400 and KTM garnered sales of close to 35,000 units, which marked a growth of 15 percent YoY in FY2017.

In motorcycle exports, the company claims that it has gained market share in 16 out of 18 key markets that together contribute to be around 85 percent of its total two-wheeler export business.

“Bajaj Auto continues to be India’s No. 1 exporter of motorcycles and three-wheelers, having exported 1.2 million motorcycles and 191,000 three-wheelers,” quotes the company release.

Record-setting year for KTM
Its Austrian partner KTM AG, in which Bajaj Auto has a stake of about 48 percent, has reported a record year in CY2016. KTM registered total sales of 203,423 motorcycles, up by 11 percent YoY. The turnover and PAT grew by 12 percent YoY (at 1.14 billion euro) and 13 percent YoY (at 72.1 million euro) respectively. Proportionate profit after tax (PAT) of 34.6 million euro or Rs 255 crore has been accounted in the consolidated results of Bajaj Auto.

On the commercial vehicle front, Bajaj Auto has reported an improvement in its market share, which now stands at 49.5 percent for FY2017.

The company now stands on a cash reserve of Rs 12,368 crore as on March 31, 2017 as against Rs 9,086 crore as on March 31, 2016.

(With inputs from Nilesh Wadhwa)