Bajaj Auto reports operationally inline performance in Q1FY23, ASP's rise however surprises positively!
Bajaj Auto (BAL) reported steady performance in Q1FY23 and was operationally in line with our estimates. EBITDA margins for the quarter came in at 16.2%, down 92 bps QoQ. Gross margin decline for the quarter was lower than anticipated (at ~30 bps QoQ) however higher employee costs (up ~90 bps QoQ) dented the overall margin profile
In Q1FY23, for BAL, total operating income stood at ₹8,005 crore, flat QoQ with average selling price (ASP) coming in at ₹ 83,210/unit, up 5.2% QoQ. Sales volumes for the quarter stood at 9.3 lakh units, down 4.4% QoQ. EBITDA in Q1FY23 stood at ₹1,297 crore with consequent PAT at ₹ 1,173.3 crore, down 20% QoQ. Muted PAT performance was due to onetime exceptional gain of ₹315 crore (incentive receivable from the state government of Maharashtra for the period April 2015-March 2021) booked in Q4FY22.
Overall quarterly performance of BAL in Q1FY23 was on expected lines. Sequential rise in ASP’s however was the real surprise despite lower share of 3-W’s in the overall sales volume mix. The 3-W share in volume declined ~280 bps QoQ to 9% in Q1FY23. Export mix however improved with exports volume share pegged at 62% in Q1FY23 vs. 60% in Q4FY22. Bajaj Auto is the prominent player in the domestic motorcycle space with market share pegged at ~18.2% for FY22. On the monthly sales volume front company has witnessed some setback due to persistent chip shortages. It is presently executing a share buyback program amounting to ₹ 2,500 crore at a maximum buy-back price of ₹ 4,600/share through open market route. The company has commenced upon its journey towards electrification with Chetak scooter, with sales volume in this domain pegged at ~8,200 units in FY22 and successful commissioning of EV facility under Chetak Technology Limited. Company’s product on the E 3-W space is however still awaited. The key monitorable going forward at Bajaj Auto would be demand outlook in domestic and international markets and further affirmative steps on electrification.
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