Bajaj Auto gains ahead of Q1 earnings; here is what analysts expect

NEW DELHI: Shares of traded with gains on Thursday ahead of its June quarterly earnings. Analysts expect the company to deliver better numbers year-on-year but margins may decline.

The stock was up 0.58 per cent to Rs 3,926.55.

Nomura said it expects revenue growth of 142 per cent YoY but down 4 per cent versus 1QFY20, led by volume growth of 127 per cent YoY, which is down 21 per cent versus 1QFY20. Though, these numbers look inflated because of the low base of last year.

It added Ebitda margins are likely to decline by 240 bps QoQ on higher commodity prices, partly offset by price hikes and a sharp 10 pp jump in exports mix QoQ.

The auto industry has been dealing with rising commodity costs, which have subsided somewhat from May levels, but are still higher QoQ. Price hikes of about 1-3 per cent in Apr-21 only partly offset this cost increase, and hence, margins are likely to drop QoQ, analysts said.

More price increases would be required in 2QFY22F, which, if not taken, can impact margins further, they added.

Reliance Securities said higher traction in the exports business coupled with increased contribution of 3W sales is expected to improve its profitability. It pegs June quarter sales at Rs 7,407.4 crore and profit at Rs 1,041.2 crore.

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