Bajaj Auto Q4 preview: Net profit may rise 4% YoY; sales to surge 21% on demand revival

MUMBAI: Two-wheeler maker is likely to report a muted set of numbers on Thursday for the quarter ended March with the company’s net profit likely to rise merely 4 per cent on-year to Rs 1,359.6 crore despite a favourable base.

The company’s topline, however, will show the effect of low base as it is expected to rise 21 per cent on-year to Rs 8,231 crore, reflecting the recovery in demand. The year-ago quarter for the company was affected by the national lockdown in the last week of March and the general slowdown in the economy prior to the pandemic.

The March quarter was affected by some softness in volume growth due to surge in Covid-19 cases in Maharashtra in February and March. The company also took price hikes in the quarter to partially offset the impact of rise in commodity prices.

On a sequential basis, brokerage firm Edelweiss Securities expects the company’s performance to be weak due to lower volume growth. The brokerage expects revenues to decline 6.4 per cent and gross margins to shrink 120 basis points due to sharp rise in commodity prices.

Operating performance of the company on a year-on-year basis is expected to be healthy as operating profit may rise 18.4 per cent to Rs 1,483 crore. Brokerage firm Kotak Institutional Equities, however, expects the company’s operating margin to shrink 50 bps on-year to 17.9 per cent.

Investors will keenly await the management’s commentary on the impact of the renewed lockdowns in the country as well as the outlook on the export market. The company’s comments on the impact of the surging raw material prices will also be watched out for.

Shares of Bajaj Auto ended 2.7 per cent higher on Wednesday at Rs 3,887.15 on the National Stock Exchange.