NEW DELHI: On Wednesday, two of India’s largest automakers reported their earnings for a quarter during which the industry’s sales growth touched rock bottom. While the country’s largest two-wheeler maker Hero MotoCorp reported 10 per cent year-on-year decline in net profit during the July-September quarter of the financial year 2019-20, Pune-based Bajaj Auto stunned Dalal Street with a spectacular performance.
Net profit for Bajaj Auto rose 21.7 per cent year-on-year to Rs 1,402 crore in Q2 FY20, which was sharply higher than Bloomberg’s consensus estimate of Rs 1,153 crore. The rise if profit was aided by a tax expense reversal of `182 crore, which experts believe was due to the corporate tax rate cut.
Bajaj’s profit was also aided by a 27 per cent increase in other income at Rs 393 crore and increase of 9.4 per cent in realisation rate per unit. Revenue for the automaker fell 4 per cent YoY to about Rs 7,707 crore in Q2 and total volumes during the quarter dipped 12 per cent to 1,173,591 units.
EBITDA margin contracted to 16.6 per cent from 17.1 per cent a year ago, but it stayed higher than the estimate of 15.7 per cent. Post the results, shares of Bajaj Auto touched over 20 months high of `3,225 on Wednesday.
Hero MotoCorp, on the other hand, reported a profit of Rs 875 crore in Q2FY20, against Rs 976 crore in FY19. Its revenue from operations fell by 16.71 per cent to Rs 7,571crore in Q2FY20 against Rs 9,091 crore a year ago. EBIDTA for Q2 stood at 14.5 per cent.
“Our retail sales during the festive season have been quite steady so far, thanks to the new motorcycles and scooters that we launched recently, and our innovative schemes for customers. We hope to keep the momentum during Dhanteras and Diwali,” said Niranjan Gupta, CFO, Hero MotoCorp.
Beating estimates
Bajaj Auto’s net profit rose to Rs 1,402 crore, which was sharply higher than Bloomberg’s consensus estimate of Rs 1,153 crore.