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Bajaj Auto Limited (BAL) reported impressive and better then expected results in Q4 FY22 led by 3Ws and exports. Topline fall at 8% yoy and 12% qoq was lower than expected despite volumes dipping by about 17% yoy in the quarter offset by ASP growth at 10% on price hikes taken and better product & geography mix. This was a sequential fall of 12%. Sequentially the volume fall was 17% as well. During the quarter, domestic motorcycles de-grew by 30% yoy, while 3Ws were up by 8% yoy. Exports motorcycles de-grew by 7% yoy, while 3Ws fell by 11%. EBITDA dropped by 10% yoy to ₹13.7 bn, while margins moved upto 17.7%, a growth of 210 bps qoq, while remaining flat yoy. Margins moved up sequentially as RM costs to sales eased a bit (74.2% as % of sales) and some arresting of employee costs was also seen. All other cost items below operating levels remaining more or less range bound, bottomline came in 13% down yoy and 5% down qoq at ₹11.53 bn as tax rate was up at 27%. During FY22, revenues grew by 18.4%, led by 8% volume growth and 10% ASP hike. EBITDA margins were down at 15.9% on severe cost pressure stemming from RM costs. Adjusted Bottomline was at ₹47 bn, up by 3.3%.

3Ws bounce back to normalcy ; domestic 2Ws to benefit from new launches, supply chain easening

Domestic motorcycle volumes witnessed a 30% dip on a high base of last year. The company’s market share in domestic 2Ws stood at 20% v/s 19.2% qoq and 18% yoy, led by success of the models such as the CT 110X and Pulsar NS 125 in the entry commuters and executive segments respectively. The 2W industry in the year declined by 12%, while BAL posted a lower decline of 9% leading to market share gain. Chetak scooter sold about 3,300 units in the quarter and has an order book of 10,000 units. The product is now present in 20 cities and is planning to be in 50 cities in the next one year. Management also stated that despite Covid wave #2 impacting the markets, premium segment brands like Pulsar and KTM also have seen a good traction in the fiscal. Pulsar 125 NS remained the top seller while contributing 22% of its executive segment. The newly launched 250 cc platform is also performing well with both Pulsar 250 NS models attracting good response. Even in the sports segment, Dominar 400 is being received well. Management expects a full new range of new Pulsar variants along with new platforms to launch in the coming 6-9 months to drive their business. Management expects supply issue to normalize by July post which the demand can be easily catered to

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