Bajaj Auto Q4 review: Exports, Demonetisation, BS-III vehicles ban to play its role
Highlights:
- Bajaj Auto's earnings likely to be impacted by exports, demonetisation, BS-III vehicles ban
- Revenue decline of nearly 10% seen
- EBITDA margins may improve
Analysts believe earnings of Bajaj Auto in the fourth quarter of financial year 2016-17 (FY17) will be impacted due to decline in exports, demonetisation drive and transition to BS-IV from BS-III vehicles.
Motilal Oswal said, “Total two-wheeler sales declined by 7% in 4QFY17, while 3W volumes fell sharply by 28% YoY led by both domestic and exports falling by 30% & 25% respectively led by demonetization and currency issues in African markets continued.”
While presenting the March month sales number, Bajaj Auto had stated that its volume for April 2016 – March 2017 period decreased by 6% with sales of 3,665,950 vehicles as against 3,893,581 units a year ago same period.
Chirag Shah and Karthik Subramaniam, analysts at Edelweiss Financial Services said, “We expect revenue decline of 9.6% year-on-year, in line with volume decline."
"We expect operating margins to decline 70 basis points sequentially to 19.9% due to impact of negative operating leverage and discounts to clear BS-III inventory, offset only partly by a better product mix. We assume a one-time impact of Rs 36 crore to factor in higher discounts to clear the BS-III inventory,” they said.
Ankit Merchant and Shweta Koltharka, analysts at KRChoksey expect revenue to decline by 11.7% year-on-year.
The duo at KRChoksey added, “We expect the gross blended realization to improve by 1% y-o-y growth driven by refreshment of Pulsar and launch of Dominor."
"We expect the EBITDA margin to improve by 80 basis points Q-o-Q but remain flat Y-o-Y on back of increasing SG&A spend. We expect PAT margins to decline by 67 basis points Q-o-Q and remain flat Y-o-Y,” Merchant and Koltharka said.
As per Motilal Oswal, Bajaj Auto is expected to report net profit of Rs 841.9 crore, down by 11.31% yoy and 8.94% qoq and that of revenue to be at Rs 4,910.9 crore, decreasing by 8.42% yoy and 3.07% qoq.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
11:19 AM IST