Economy, Auto

India’s Bajaj Profits Up Despite Weak Iran, Africa Sales

India’s Bajaj Profits Up Despite Weak Iran, Africa SalesIndia’s Bajaj Profits Up Despite Weak Iran, Africa Sales

India’s Bajaj Auto’s December quarter performance sprang a positive surprise for the owners of the company. At a time when analysts had penciled in subdued results after factoring in the drop in sales on account of demonetization, the two- and three-wheeler manufacturer beat forecasts on all fronts.

In fact, the steep 10.5% drop in sales, with three-wheeler sales falling by 17% after demonetization, had already toned down investor expectations for the quarter,

However, the 9% drop in net revenue to Rs 5,066 crore ($761 million) when compared to a year back was not as bad as analysts had estimated.

New launches and Bajaj Auto’s focus on profitability churned out a 1.4% expansion in average realization, which minimized the impact of the drop in sales on account of the currency shortage.

Besides, there were other odds too. The company’s exports have been contracting for many quarters, mainly because exports to Iran and Africa have been hit hard due to plunging crude oil prices and the sharp devaluation of the currencies in these nations against the US dollar.

Costs of raw material, staff and marketing were maintained as a percentage to sales, in spite of weak volumes and operating leverage. The company’s operating margin came in at 20.6%, about 80 basis points higher than Bloomberg’s average estimate. A basis point is one-hundredth of a percentage point.

Operating profit, which fell by 10.9% from the year-ago period to Rs 1,043.9 crore ($160 million), was also higher than expected.

Finally, the strong beat in operating performance on the back of better realization and cost control shored up net profit by 2.6% to Rs 924.6 crore ($138.98 million). Little wonder that Bajaj Auto’s stock rose marginally when the broader indices were jittery in the pre-budget trading session.

According to the company’s main page, the company’s current distributor in Iran is Fars Industrial Group. 

The company up until last year was represented by Kavir Motor Group. However, the brand is no longer listed on the firm’s website. 

In January 2016, the firm claimed to have the official contract to sell KTM motorcycles in Iran and that it recently opened a flagship showroom for those bikes in northern Tehran. 


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