Earnings Call for Q3FY22 of Bajaj Auto
Conference Call with Bajaj Auto Management and Analysts on Q3FY22 Performance and Outlook. Listen to the full earnings transcript.20-01-2022
20-01-2022
Bajaj Auto's Q3 net profit declines 22% on weak domestic volumes
The company expects exports performance to continue outpacing domestic operations in Q419-01-2022
Q3FY22 Quarterly Result Announced for Bajaj Auto Ltd.
Automobile company Bajaj Auto declares Q3FY22 result: For Q2/FY22, EBITDA & % duly adjusted for RoDTEP (Jan to Jun 2021 - Rs 82 crore) & MEIS (Apr to Dec 2020 - Rs 60 crore) Sequentially, EBITDA margins improved from 15.0% (adjusted) in Q2 / FY22 to 15.6% in Q3 / FY22, largely for two reasons: Positive net impact of price increase, less material cost increase. Favourable export realization for US$ to INR. In the domestic motorcycle market, industry recorded a decline of 23% over Q3/FY21. In contrast, Bajaj Auto fared marginally better recording sales of over 469,000 units, a decline of 20%. Market share improved to 19.2% in Q3 / FY22 as against 18.6% in Q3/FY21 and 18.1% in FY21. In the domestic commercial vehicle market, industry recorded a growth of 5% over Q3 / FY21. In contrast, Bajaj Auto recorded a growth of 52% and reported market share of 71%, continuing its leadership position across the three product categories in this segment. Exports continue to record strong sales with average monthly volumes in excess of 219,000 units. For the calendar year 2021, exports, by volume exceeded 2.5 million units - highest ever Result PDF19-01-2022
BAJAJ AUTO LTD. - 532977 - Board Meeting Outcome for Un-Audited Financial Results For The Quarter And Nine Months Ended 31 December 2021
The meeting commenced at 11.00 a.m. and concluded ate 5.10 p.m.19-01-2022
BAJAJ AUTO LTD. - 532977 - Un-Audited Financial Results For The Quarter And Nine Months Ended 31 December 2021
Un-audited financial results for the quarter and nine months ended 31 December 202119-01-2022
BAJAJ AUTO LTD. - 532977 - Shareholding for the Period Ended December 31, 2021
Bajaj Auto Ltd has submitted to BSE the Shareholding Pattern for the Period Ended December 31, 2021. For more details, kindly Click here18-01-2022
BAJAJ AUTO LTD. - 532977 - Announcement under Regulation 30 (LODR)-Analyst / Investor Meet - Intimation
Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Schedule III Part A thereto, this is to inform you that a conference call for analysts institutional investors is scheduled on 20 January 2022 (Thursday) at 10.00 a.m. IST for discussing Company''s Q3 FY22 results. Dial in and other details of the call are enclosed.14-01-2022
BAJAJ AUTO LTD. - 532977 - Compliances-Certificate under Reg. 74 (5) of SEBI (DP) Regulations, 2018
Please find enclosed herewith a Certificate issued under Regulation 74(5) of SEBI (Depositories and Participants) Regulations, 2018, by KFin Technologies Private Limited, the Registrar and Share Transfer Agent of the Company, for the quarter ended 31 December 2021. We request you to kindly take the same on record.11-01-2022
BAJAJ AUTO LTD. - 532977 - Statement Of Investor Complaints For The Quarter Ended December 2021
No.of Investor complaints pending at the beginning of the quarter No.of Investor complaints received during the quarter No.of Investor complaints disposed of during the quarter No.of Investor complaints unresolved at the end of the quarter 0330 Name of the Signatory :- Dr J SridharDesignation :- Company Secretary and Compliance Officer11-01-2022
Bajaj Auto’s business is getting an electric boost
The fact that Bajaj Auto (BAL), which has built a robust export business for motorcycles is also feeling the pain in its monthly wholesales, tells you a lot about the present state of the Indian two-wheeler industry. BAL’s two-wheeler wholesale volumes for November 2021 (1,44,953 units) and December 2021 (1,27,593 units) fell 23% YoY and 1% YoY respectively. The ailing two-wheeler industry has been ravaged by the pandemic and is now reeling under weak domestic demand, slowing exports, and persistent semiconductor chip shortage. While Bajaj Auto’s dependence on the domestic market is low compared to close peer Hero MotoCorp, investors are keenly watching how BAL, the market leader in the premium motorcycle segment, will overcome shortages and fine-tune its export strategy amid disruptions caused by Omicron. Quick Takes With a 20% fall in two-wheeler wholesale volume (4,71,284 units), the top line is expected to be muted and operating margins will be under pressure in Q3FY22 The management expects exports to cross the $2 billion mark in FY22 vs $1.65 billion in FY21 The co-developed Bajaj – Triumph product will be launched by the end of FY22-23 The company announced an investment of Rs 300 crore to set up an electric vehicle (EV) facility in Akurdi, near Pune The EV facility will have a manufacturing capacity of five lakh units per annum catering to both domestic and export markets Exports drive the world’s favourite Indian While the launch of Bajaj Pulsar in 2001 infused a fresh lease of life in the legendary two-wheeler manufacturer, it was Bajaj Boxer that initiated its journey to become the largest Indian two-wheeler exporter. Boxer dominates African markets with nearly 40% market share in 2021. While close peers like Hero MotoCorp (HMCL) and Honda were busy garnering domestic market share at low margins in the early 2000s, BAL focused on new geographies for its premium motorcycles. From exporting 15,800 motorcycles in 2001-02, BAL exported over 2 million units in CY2021. The company exports its premium motorcycle, KTM to North America, Europe, and Australia. Pulsar, Dominar 250, Discover are hugely popular brands in Columbia, Mexico, Brazil, Peru, Guatemala, Nepal, and Bangladesh. The company took advantage of the growing middle class in Latin America, South East Asia, and African countries to expand its export business. In addition, Bajaj Auto’s strong partnership with local distributors and the ability to meet service and spare parts requirements contributed to its success. BAL currently exports to 79 countries which contribute nearly half of its revenue mix. The company reported the highest revenue (Rs 8,762 crore) and net profit (Rs 1,275 crore) in the listed two-wheeler space in Q2FY22. BAL’s top-line was 4% higher compared to Hero MotoCorp (with domestic volumes 2.5x higher than BAL) in Q2FY22. Despite lower domestic volumes (5.3 lakh units), BAL’s topline was powered by resilient exports (6.12 lakh units) in Q2FY22 and a high share of premiumisation in the product mix. BAL is the market leader in the premium motorcycle segment (150cc and above) with more than 50% market share, HMCL is at 4%. This helps BAL maintain a higher realisation per unit as premium motorcycles are priced nearly double or even higher than commuter (entry-level) bikes. HMCL is the market leader in the entry-level motorcycle segment. Thus, even with a market share of 20% in the overall two-wheeler industry, BAL’s revenue and net profit is higher than HMCL (more than 50% market share). Bajaj Auto’s net profit was 1.6x higher than Hero MotoCorp in Q2FY22. Semiconductor shortage impacts premium portfolio, retail volumes hit by Covid-19 Though it is worse for four-wheelers, the semiconductor chip shortage over the past year also took its toll on premium motorcycle manufacturers. As original equipment manufacturers (OEM) reduced production due to the Covid-19 pandemic in mid-2020, semiconductor manufacturers diverted supplies to the consumer electronic/consumer durable segment witnessing a huge demand upsurge. With the rise in demand from both auto and electronics/consumer durable segments, semiconductor producers are currently unable to smoothen out the demand & supply mismatch. In two-wheelers, semiconductor chips are used in high-end premium motorcycles for features like bluetooth connectivity, immobilizers (anti-theft), digital LED screens, anti-lock braking (ABS) systems, and navigation features. According to BAL’s management, chip shortage impacted 20% of its premium motorcycle portfolio in the September 2021 quarter. For TVS Motor, chip shortage impact was to the tune of 25000 units of Apache premium motorcycles. Speaking on the semiconductor issue, Rakesh Sharma, executive director, Bajaj Auto said, “We have seen gaps of up to 50% in demand and supply, causing stock-outs across overseas markets and affecting the KTM, Dominar, and Pulsar brands.” The management expects the chip issue to continue for the next 3-4 quarters. Sharma said that the company was preparing for the worst-case scenario and taking countermeasures like rejigging its portfolio and marketing programs in overseas markets and India to mitigate the impact of shortages. The chip shortages have led to slower deliveries and production delays for BAL’s premium portfolio, impacting both exports and domestic production. Exports, after hitting a peak in July (103% YoY growth), started slowing in August-September 2021, driven by shortages, disruptions from the third wave, and increased competitive intensity in overseas markets. Chinese manufacturers have made a comeback in African countries while dealership changes in Columbia impacted sales. The Columbia dealership changed hands from Auteco to the UMA group in 2021. According to the management, it is also increasingly tough to raise prices in overseas markets. Competitors are not ready to increase product prices due to lower demand which is impacting BAL’s global realisations. Two-wheeler export volumes (22.3 lakh units) increased 33% YoY in CY2021 and 36% YoY jump over the first nine months (16.7 lakh units) of FY22. Bajaj Auto’s domestic two-wheeler wholesale volumes (4,71,284 units ) in the December 2021 quarter fell 20% YoY. TVS Motor is also at the same level. HMCL wholesale numbers fell by 33% YoY. In addition to weak demand, OEMs dispatching a high number of vehicles to dealers in anticipation of similar 2020 festive zeal in 2021 also contributed to a double-digit wholesale volume fall in Q3FY22. With a 20% volume decline on a high base of Q3FY21, Bajaj Auto’s top line will be hit in the December 2021 quarter. Lower volumes and cost increases will also impact operating margins in Q3FY22. According to management, costs are expected to increase by 2% QoQ in the December 2021 quarter. Federation of Automobile Dealers Associations (FADA) two-wheeler retail volumes for December 2021 are also out. This shows a double-digit fall in retail volumes indicating persisting poor consumer sentiment. People are less inclined to spend on discretionary products and are conserving cash for health emergencies. Compared to its peer group, Bajaj Auto’s retail volume fall was the lowest in December 2021. According to the management, BAL’s 60% domestic volumes come from 45% of the top half of the demand pyramid, mainly the 125 cc segment, where Pulsar 125 market share is at 25%. BAL is planning to launch a new product in the 125cc segment, but the timeline is not defined by the management. As the 125 cc segment becomes crowded with the entry of TVS Raider 125, BAL needs to consolidate its position in the fastest-growing motorcycle segment. EV investment to start off from Chetak facility Among the top two-wheeler manufacturers, Bajaj Auto will be the last one to be disrupted by electric scooter start-ups. With no ICE scooter portfolio, electric scooter sales are incremental for BAL. Chetak, BAL’s electric scooter, launched in 2021 already has a 40% market share in Pune, according to the management. The company plans to reach 30 cities by March 2022. Electric scooter demand is currently just 1% of the total two-wheeler industry. All top three OEMs have recently announced dedicated EV divisions and subsidiaries, and defined investment plans. Electrification is definitely the future of mobility, but the EV segment will take another 4-5 years to garner a respectable market share in two-wheelers. Bajaj Auto is working on a number of products ranging from scooters, motorcycles, and three-wheelers for EV mobility. The company is also working with KTM in the EV space. Bajaj Auto recently announced the setting up of a Rs 300-crore EV facility in Akurdi, near Pune. The first EV is expected to be rolled out by June 2022. Akurdi is the famed original ‘Chetak’ facility. For context, the company had earlier stopped taking orders for its Chetak EV because it couldn’t meet the surge in demand. Commercial vehicle segment revives, CNG three-wheeler to spur growth Bajaj Auto’s commercial vehicle (CV) segment comprises three-wheelers, good carriers, and quadricycles. The CV segment constituted 11% of BAL’s total volumes in Q3FY22. CV volumes are up 18% YoY and 16% sequentially in Q3FY22. The three-wheeler segment is the major constituent of its CV product mix and BAL is the market leader with more than 50% market share in 2021. The domestic three-wheeler market recovered strongly after the second wave as restaurants, offices, and shopping malls re-opened. Even though Covid-19 infections are rising, commercial traffic and inter-city mobility is not expected to be as impacted this time around. Three-wheelers being a high margin product, a favourable impact on operating margins is expected in the coming quarters with rising volumes. The company also sees strong opportunity in the compressed natural gas (CNG) three-wheeler segment which constitutes 45% of the total three-wheeler market in India. Currently, there are 1500 CNG pumps and the government plans to open another 9,500 pumps by 2025. According to the management, a single CNG pump creates a market for 10,000 CNG three-wheelers in the industry of which 90% demand is garnered by Bajaj Auto. The company is also foraying into electric three-wheelers and will launch its product by May 2022. But according to the management, electric three-wheelers are on a weaker wicket. Even after recent CNG price hikes, the difference between CNG and petrol/diesel is around Rs 40. And with the strong government backing for CNG, electric three-wheelers (with high acquisition costs compared to CNG three-wheelers) will find it difficult to gather momentum11-01-2022