Bajaj Auto Ltd., India’s second-biggest motorcycle maker, reported a worse-than-expected 11.3% drop in quarterly profit on Wednesday as higher costs dented margins and investment income fell.
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But analysts told Reuters its margins and unit sales would improve in the next two quarters, helped by the launch of high-priced new models in the world’s biggest motorcycle market after China.
Bajaj, which also makes scooters and dominates the market for three-wheeled motorised rickshaws, reportedly said net profit dropped to 1.79 billion rupees ($US39 million) in its second quarter to the end of September from 2.02 billion a year ago.
The median in a Reuters poll of 12 analysts’ forecasts was for a net profit 1.91 billion rupees.
Bajaj’s sales, net of excise tax, rose 16% to 14.48 billion rupees, while other income, mainly returns from investment, fell 25% to 882.7 million rupees, the report said.
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By GlobalDataLast week, market leader Hero Honda posted a 24.2% rise in quarterly profit to 1.94 billion rupees, Reuters noted.
Bajaj, which uses technology from Japan’s Kawasaki Heavy Industries for some models, reportedly increased motorbike sales by 34.5% in July-September to 336,425 units, better than the industry’s 18.8% sales rise.
But earnings growth was hurt by a sharp increase in prices of steel, plastics and rubber as well as stiff competition that forced it to offer discounts in the $4 billion market. Returns from its cash pile of more than 40 billion rupees also fell, the report added.
Operating margin, a key measure of efficiency, fell to 16.54% in the quarter from 18.18% in the year-ago period, but it was up from 15.04% in the preceding three months, Reuters said.
