Bajaj Auto Q4 Results FY2023 Preview: What to Expect?

On 25th April, Bajaj Auto is going to announce its financial results for the March 2023 quarter. Due primarily to lower exports, the company reported volume declines of 12.0% over the prior quarter and 12.6% sequentially. Domestic sales increased 32% over the same quarter last year, a strong increase, but they fell 6% sequentially. It is anticipated that this drop in sales volume will affect the company's overall performance.

The domestic automaker reported a third-quarter profit in the December 2023 quarter that was higher than anticipated at Rs.1,491.42 crore, an increase of 22.8% YoY. However, operating revenue increased by just 3% YoY to Rs.9,315.14 crore. Notably, the company surpassed the record set in the previous quarter by reporting the highest-ever EBITDA of Rs. 1,777 crores in Q3FY23. The EBITDA margin was 19.1%.

Market Expectations from Bajaj Auto Q4 FY2023 Results:

According to experts, a drop in overall volumes could hurt Bajaj Auto's Q4 earnings. A weak export market affected by currency depreciation, decreased affordability, and other macroeconomic uncertainties is also likely to hurt the company.

In its preview note for Bajaj Auto, Emkay Global stated that revenue would increase year over year despite a drop in volumes (-12%) due to an increase in realizations (+20%). A better mix (higher domestic 2W and 3W mix), price increases, and INR depreciation will cause realization to improve. Due to price increases, improved mix, and INR depreciation, the EBITDA margin will increase on a YoY basis. EBITDA margin will not change on a QoQ basis as the negative scale cancels out the impact of the price increase.

In a note, Prabhudas Lilladher stated, "We expect a decline in revenue of about 11%, driven primarily by the decline in export markets as a result of currency devaluation, decreased affordability, and other macroeconomic issues in the export markets. EBITDA margins are anticipated to be around 19%, primarily driven by QoQ improvements in the motorcycle mix, higher 3W volumes with price increases, and higher mix in the spare segment despite volume declines. Overall volumes for Bajaj decreased by 13% QoQ.”

With total volumes down 12.8% QoQ at 8.6 lakh units, ICICI Direct anticipates Bajaj Auto to report a muted performance in Q4FY23. Domestic volumes are down 6% QoQ while export volumes are down 21% QoQ. The percentage of exports in total volumes is 40%, down from 45% in Q3FY23. The 3-W share increased by 300 bps QoQ to 16% of the volume mix. This is anticipated to help 5% QoQ rise in blended ASP's to Rs. 96,500/unit, along with improved product mix in the 2-W space.

According to IIFL, negative operating leverage and a lower revenue share from exports are major headwinds for the margins, a weak rupee, higher average selling prices, and a higher mix of domestic three-wheelers are key margin tailwinds. The company's EBITDA margin could decrease overall by 100 basis points sequentially while slightly increasing by 89 basis points compared to the same quarter last year.

Profit After Tax, also known as PAT, is expected to perform in line with EBITDA, increasing 10.5% over the prior quarter but decreasing 8.7% sequentially.

The 2-wheeler domestic market is expected to grow by 15% YoY, while the 2-wheeler export market is anticipated to shrink by 38% YoY, according to Motilal Oswal. Despite price increases, operating leverage is likely to cause margins to decline sequentially to 18.8% in Q4FY23 from 19.1% in Q3FY23. The company anticipates a decline in earnings-per-share (EPS) for FY24/25 as a result of a slower-than-anticipated recovery in both domestic and export demand. 

Bajaj Auto reported total sales of 39,27,857 units from April 2022 to March 2023, a 9% decrease from 43,08,433 units during the same period of FY22. Sales of 2-wheelers decreased by 10% YoY to 34,42,839 vehicles in FY23, whereas sales of commercial vehicles increased by a pitiful 3% YoY to 4,85,018 units. Domestic sales increased by 17% YoY to 21,06,617 vehicles on a global basis, but exports fell by a staggering 27% YoY to 18,21,240 vehicles in FY23.