Bajaj Auto Q2 preview: Revenue and net profit could see double-digit growth aided by strong volumes

In a stock exchange notification in the last week of September, Bajaj Auto informed the bourses that its board of directors will meet on October 16 to consider and approve unaudited financial results for the quarter and half year ending September 2024.

Pune-based Bajaj Auto, together with its subsidiaries, is engaged in the development, manufacture, and distribution of two-wheelers and three-wheelers. The company offers motorcycles, bikes, commercial vehicles, electric two-wheelers, and three-wheelers, as well as automotive parts.

Experts predict double digit growth in revenue, net profit

Analysts are expecting the company to post 10th successive quarter of double-digit revenue growth during Q2FY25 on the back of increase in two-wheeler volumes and marginal increase in average selling price on account of richer product mix and price hikes.

According to experts, Bajaj Auto is likely to see revenue growth of 20-25% in the September quarter compared to the year-ago period. The automaker’s net profit is expected to rise 17-23%.

Analysts expect the company to post quarterly revenue of anywhere between ₹13,155 to ₹13,488 crore during Q2FY25. Profit after tax (PAT) could remain in the range of ₹2,157 to ₹2,293 crore. Operating profit, or earnings before interest, tax, depreciation and amortisation (EBITDA), could fall anywhere between ₹2,597 crore and ₹2,727 crore.

Previous quarter performance

Bajaj Auto had posted solid numbers in the previous quarter. The company’s Q1FY25 consolidated net profit had increased 18% year-on-year to ₹1,941.8 crore due to robust demand for its 2-wheelers. Meanwhile, revenue during the first quarter jumped 16% YoY to ₹11,932 crore.

Its EBITDA during the June quarter rose 24% to ₹2,415 crore, while its operating margin improved by 130 basis points (bps) to 20.2%.

Factors to look out for

According to experts, investors should take note of Bajaj Auto’s exports performance. A continued slowdown in the export market can affect its profit.

Nigeria, which accounts for about 50% of Bajaj Auto's Africa sales, continues to be under pressure due to rising inflationary conditions in the region. Bangladesh, the company’s second-largest export market, is also experiencing weak demand. Hence, the management commentary on the anticipated recovery in exports would be important.

Announcing new launches could also set the pace for future stock movement. Bajaj Auto is expected to introduce a new affordable two-wheeler electric vehicle and a premium two-wheeler electric vehicle following the festive season. It is also looking to launch another CNG two-wheeler by the end of FY25. Management’s target to capture market share through forthcoming new launches should be an important factor to watch out for.

We can also expect an announcement on the company’s new CNG bike, Freedom 125. Freedom 125 has been well received by customers and is experiencing strong demand, which may prompt the management to aim for a production increase by January 2025.

Bajaj Auto share price

Bajaj Auto shares tumbled as much as 3.63% in trade on Tuesday to hit an intraday low of ₹11,467 apiece on the NSE, just a day before the Q2 earnings announcement.

The stock price has been flat in the past one month but has surged over 72% year-to-date in 2024. In the past one year, Bajaj Auto shares have gained over 127% compared with a 27% increase in the benchmark NIFTY50 index.

The stock recovered some of its early losses to close 3.04% lower at ₹11,537 apiece on the NSE.