- 17 Oct 2022
- ICICIdirect Research
Bajaj Auto reports steady performance in Q2FY23BAJAJ-AUTO - 3828 Change: -35.05 (-0.91 %)
Bajaj Auto (BAL) reported a steady performance in Q2FY23 with total operating income for the quarter coming in at Rs 10,203 crore up 27.5% QoQ. Total volumes for the quarter were at 11.5 lakh units, up 23.3% QoQ with exports share in volumes pegged at 40% vs. 62% in Q1FY23. EBITDA in Q2FY23 stood at Rs 1,759 crore with corresponding EBITDA margins at 17.2% up 104 bps QoQ. Healthy margins was on account of lower employee expense & other expense which declined ~130 bps & ~100 bps QoQ respectively amid gross margins decline at ~120 bps QoQ. Consequently compant reported PAT of Rs 1,530 crore up 30% QoQ.
On the demand outlook front, management commentary was optimistic albeit indicating slow pace of volume recovery. With inventory down at its dealerships in key export markets it expects QoQ improvement in total export volumes, going forward. On the domestic front, it continues to focus on 125cc+ segment, which is gaining traction in the 2-W space. With lagged effect of decline in raw material prices to kick in from H2FY23, margins at the company are expected to improve. However, over the medium term (FY22-24E), we expect volume recovery to be in single digits, which will limit the upside potential in company’s stock price.