Bajaj Auto Q1 Profit Fall 19 Per Cent

Bajaj Auto has announced that consolidated net profit has declined 19.51 per cent to Rs. 836.79 crore in the first quarter of the current fiscal, on account of lower sales. Bajaj had posted Rs. 1,039.70 crore in the April-June quarter of the last fiscal. Total income from operations during the April to June 2017 period stood at Rs. 6,177.66 crore as against Rs. 6,355 crore in the same period a year ago. In a press release, Bajaj Auto said that the domestic industry was impacted due to two factors - the changeover from BS-III to BS-IV vehicles and transition to the new Goods and Service Tax (GST).

Bajaj Auto's latest motorcycle is the new Pulsar NS160

Bajaj Auto said the company provided for Rs. 32 crore towards compensation to dealers for transition to GST. Competition continued to build stocks at dealerships and hence in June, performance measured on wholesale numbers was negative for the company and reflected a lower market share, the company said. With a sharp drop in billing number of domestic motorcycles in June 2017, a major portion of overheads, especially advertisement, had to be absorbed by a lower sale of motorcycles and hence operating EBITDA margin for the motorcycle business saw a decline, the statement said.

However, Bajaj Auto's international business continued to grow. International sales volume was 4,09,525 units in the review period, a growth of 26 per cent over the fourth quarter of FY2017 and 10 per cent over the first quarter of FY2017. And sales volume for high-end motorcycles improved to 30 per cent in the first quarter of FY2018, as against 25 per cent in Q4 of FY2017 and 26 per cent in Q1 of FY2017. The company said operating EBITDA margin for International Business remains intact.

The KTM 250 Duke is selling well, and the KTM 390's demand is outstripping supply

The other silver lining is the performance of the KTM brand. Bajaj Auto owns 48 per cent in the Austrian motorcycle brand. KTM sales volume in the April to June 2017 period was 12,984 units, as against 8,952 units in the fourth quarter of 2016-17, registering a growth of 45 per cent over Q4 FY2017. Sales of KTM bikes in the first quarter of 2016-17 was 8,494 units, and in the review period, KTM motorcycle sales in the domestic market registered a growth of 53 per cent. Bajaj said the newly launched KTM models have been extremely well-received, with the KTM 250 Duke selling over 2,500 units while the KTM 390 models currently have a waiting period in the domestic market. While production has been ramped up, demand still outstrips supply.

Bajaj is looking to improve sales performance in 2017-18 on the back of recoveries in both domestic and international markets. Recently, Bajaj launched a new model in the premium commuter segment, the Bajaj Pulsar NS160. Bajaj will also launch the Husqvarna brand in 2018.