Bajaj Auto Limited is an Indian multinational automotive manufacturing company based in Pune. The company manufactures motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan during the 1940s.
Bajaj Auto is the world’s third-largest manufacturer of motorcycles and the second largest in India. It is the world’s largest three-wheeler manufacturer. In December 2020, Bajaj Auto crossed a market capitalization of ₹1 trillion (US$13 billion), making it the world’s most valuable two-wheeler company.
The company exports to 79 countries across several continents to Latin America, Southeast Asia, etc. The company has acquired 48% of the KTM Brand which manufactures sports and super sports two-wheelers.
Quarterly Growth Walkthrough
Bajaj Auto reported their consolidated quarterly results with significant improvement across all parameters for the second quarter of the fiscal year 2022-23 with their net income from sales & operations at Rs 10,203 crore. This is an incredible 16.4 percent growth in comparison with the same quarter of the last fiscal year. The company reported their net profit at Rs 1,719 crore which has fallen down by 15.7 percent on a QoQ basis. EBITDA was reported at Rs 2,083 crore in September 2022 up 21.2% from Rs 1,718 crore in September 2021. Bajaj Auto EPS has shrunk to Rs. 60.10 in September 2022 from Rs. 70.50 in September 2021.
The diminishing effect arising out of the shortage in semiconductor chips has been controlled, domestic demand has shown excellent recovery, affluent product range and operating leverage has supported the company to enhance its operating margin both on a year-on-year (YoY) and quarter-on-quarter (QoQ) basis.
Notable Highlights
A steady advancement has been seen in the domestic demand, along with the reduced effect of shortage in semiconductor chips in the 2-wheeler (2W) segment has supported a 27 percent growth in the company’s 2W volume on a year-on-year (YoY) basis.
The company has given a YoY growth of 40 percent in the 3-wheeler (3W) segment. This growth was accomplished by the easing of the economy after the pandemic.
The export market was difficult as the company had to suffer hindrance in demand due to the challenging macroeconomic situation in some markets. The company faced a decline of 26 percent in the 2W segment and a 16.6 percent fall in the 3W segment.
The company has reported that demand has shown a strong gain in momentum. The outlook is highly reassuring for the long-term prospects with the support of the government’s focus on rural areas. An above-average monsoon and sturdy crop production are expected to support demand. Additionally, the re-opening of schools, colleges and offices is expected to revitalize demand.
Commencement of new products
Bajaj Auto believes that growth will be driven through new variants of existing products or fresh offerings. The company plans to deploy multiple new models and upgrades in FY23. Bajaj Auto developed the Pulsar N160, which is receiving an appreciative demand.
Face-lifted versions of Dominar 400 have been released. The deployment of the new versions will assist the company to increase its market share.
Considering the electric vehicle (EV) segment, the company has commissioned a new modern manufacturing plant in June 2022. Bajaj Chetak, the company’s electric 2-wheeler, pursues vigorous traction and the company targets to achieve an output of 6,000 units every month before the end of the current fiscal year. The company also plans to launch 3 or 4 new electric 2-wheelers over the next 2 years.
Technical Analysis
Bajaj-Auto stock price had corrected down to its 50% retracement level and has taken support twice at that level. The price is currently taking heavy support above the 38.2% retracement level, and it has been consolidated in the range of Rs 3000-4000 in the last 2 years. MFI is at 41 points which indicates the stock is very close to being oversold. The stock price is currently trading slightly above the 200-day exponential moving average.
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