Bajaj Auto Q2 Results: Net profit rises 9.2% YoY, revenue top ₹13k crore-mark for first time; EBITDA at record high

Bajaj Auto Q2 Results: Bajaj Auto announced its July-September quarter results for fiscal 2024-25 (Q2FY25) on Wednesday, October 16, reporting a rise of 9.2 per cent in net profit on a standalone basis at ₹2,005.04 crore, compared to ₹1,836.14 crore in the corresponding period last year. 

The auto major's total revenue from operations in the second quarter of the current fiscal rose 22 per cent to ₹13,127.47 crore, compared to ₹10,777.27 crore in the year-ago period. Bajaj Auto's total revenue from operations crossed the ₹13,00-crore mark for the first time ever in the quarter under review, arising from new highs on both vehicles and spares.

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Bajaj Auto Q2 Results: Key Metrics

The two and three-wheeler major said that adjusting for the exceptional deferred tax provision, the net profit was at a new record of ₹2,216 crore, up 21 per cent year-on-year (YoY) on higher domestic motorcycle sales.

According to Bajaj Auto, the revenue growth was underpinned by double-digit volume growth on the back of yet another robust domestic performance and a steady recovery of exports, further buoyed by a richer sales mix.

The auto major said that its reported net profit was at ₹2,005 crore after making an additional provision of ₹211 crore to account for the cumulative one-time impact on “Deferred Tax on Investment Income due to the withdrawal of indexation and change in tax rate in the Finance Act, 2024.”

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The tax liability accounted for the government retroactively removing the long-term tax benefits for investments before April 2023. Hence, Bajaj Auto reported a 31-cent year-on-year decline in consolidated profit after tax to ₹1,385 crore for the September quarter, impacted by higher expenses and a one-time hit due to an increase in its provision for deferred tax. 

Rakesh Sharma, Executive Director of Bajaj Auto, told news agency PTI that the government's withdrawal of the indexation benefit on long-term capital gains had increased the effective tax rate on debt mutual funds from about 6.8-7 per cent to 14 per cent.

Sharma added that this is a one-time hit and has nothing to do with operations. In August, Bajaj Auto stated that it would need to increase its provision for deferred tax by ₹211 crore due to the withdrawal of the indexation benefit and the change in the tax rate on long-term capital gains on debt mutual funds.

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The auto major invests its surplus funds into various asset classes, including debt mutual funds. It made accounting provisions for deferred tax as per applicable law on fair value gains on these investments. The total expenses in the September quarter were higher at ₹10,767.22 crore compared to ₹8,806.47 crore in the year-ago period.

On the operational front, Bajaj Auto's earnings before interest, taxes, depreciation, and amortization (EBITDA) was ₹2,653 crore, registered its best ever, growing a 24 per cent YoY compared to ₹2,133 crore in the year-ago period. EBIT margin during the September quarter was 20.2 per cent compared to 19.8 per cent in the same period last year.

“Dynamic management of the business enabled margins to be held constant while offsetting the drag from the significant step up of e2Ws and commodity inflation; the +40 bps YoY accretion was driven primarily by favourable currency and operating leverage,” said Bajaj Auto.

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The green energy portfolio scaled up to reach new milestones, with around 10,00,00 total units sold in September and 10,00,00 electric vehicles sold in the September quarter. The portfolio comprising electric and CNG vehicles across the 2W and 3W portfolio now contributes 40 per cent of total domestic revenues.

Bajaj Auto's sustained momentum in the domestic business led to its highest revenue and tenth consecutive quarter of double-digit growth on both motorcycles and commercial vehicles. The near-trebling of electric scooters propelled it. Export revenue grew in double digits on better USD/INR realisation, a richer mix, and another record quarter for LATAM.

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Pulsar delivered its highest quarterly sales of over 11,00,00 units. Motorcycles maintained double-digit growth, as Pulsar's premiumization thrust drove the sports segment's competitive outperformance. Domestic market focus saw Triumph deliver 50 per cent QoQ volume (1,00,00 domestic, 16.5K total) from an extended network of over 100 dealers.

The Pune-headquartered company's domestic two-wheeler sales - about 64 per cent of its total for two-wheelers - jumped 26 per cent to 6,36,801 units. This includes sales of its 'Chetak' brand of electric scooters that have expanded at an aggressive pace. Its remaining two-wheeler sales comprise of exports, which grew 5.4 per cent, following a gradual recovery in its African and South Asian markets.

Bajaj Auto said it sold 12,21,504 units in the second quarter, up 16 per cent compared to 10,53,953 units in the year-ago period. Exports of two-wheelers were at 3,96,407 units as against 3,76,263 in the same quarter last fiscal, up five per cent. The company's electric scooter Chetak clocked 70,000 units in the quarter.

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On the road ahead for Bajaj Auto's electric two-wheeler portfolio, Sharma said, "We are expanding and invigorating the Chetak range just after Diwali...we will be starting with the launch in November, which will upgrade the product and make the portfolio broader, and we are very optimistic about that." 

Urban customers bought premium motorcycles, boosting motorcycle makers' margins. Bajaj's 200cc-plus segment includes its popular Pulsar models. Sharma said Chetak is clocking about 19,000-20,000 units monthly and “should be exiting the year at a substantially higher level than the 20,000”. 

Bajaj Auto's board has approved additional investment in the equity share capital of Bajaj Brazil, a wholly-owned subsidiary. The board approved the phased investment of up to $10 million in its Brazil unit to help expand its business in the South American country, which also houses its first manufacturing plant outside India.

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On the new investments, Sharma said,"We are capitalising it (the Brazil arm) for two purposes. One is that we see that we will need to increase capacity next year. So we are putting in place that right now." He said that Bajaj Auto has an annual capacity of 20,000 units at present, adding, "We want to take it to 35,000 units for FY26."

Besides, Sharma said the working capital cycle has slightly become longer as there is a need to maintain higher stock levels due to shipping disturbances around the Red Sea and the lower water level of the Amazon River. Ahead pf the announcement of Q2FY25 results, shares of Bajaj Auto settled 0.85 per cent higher at ₹11,617.55 apiece on the BSE.

Bajaj Auto's strong cash generation track record continued during the quarter, adding over ₹2,000 crore in free cash flow. “The balance sheet remains healthy with surplus cash of ₹16,392 crore after having invested ₹1,200 crore behind strategic growth enablers (primarily capital infusion into Bajaj Auto Credit Ltd. and EV capex) and distributing ₹2,233 crore as dividend in H1 FY25,” said the auto major in its stock exchange filing.