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Street expects 20% revenue growth and lower margins


Bajaj Auto Ltd is expected to report its financial results for the second quarter of the current fiscal year on Wednesday, October 27. Street expects the automaker’s numbers to be much better.

On the revenue side, street expects 20 percent growth this time around. Indeed, the overall growth of the company was 9% and the average selling price also increased by 9%, as they carried out price increases to pass on the cost of raw materials to the consumer.

Revenue growth is strong, but again Bajaj Auto, like all other companies in the automotive industry, is facing pressure on margins. The margin is expected to drop to 15 percent from 17.7 percent.

The higher raw material costs will have a negative impact of 300 to 350 basis points which will be offset by the price increase that has been taken, the RoDTEP benefits, which are the export benefits, and the lower costs staff from quarter to quarter.

Thus, between Maruti Suzuki and Bajaj Auto, Maruti should be the weakest. Bajaj Auto will be better off because of its export exposure and better performance in this segment.

Bajaj Auto stock traded flat during the afternoon session today, after hitting the day’s high of Rs 3,836.70.

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