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Bajaj Auto Q2 results expected to be mixed bag

Bajaj Auto will report its second-quarter earnings on Wednesday and analysts expect it to be a mixed bag this time around.

By Sonia Shenoy Oct 24, 2018 8:59:40 AM IST (Updated)

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Bajaj Auto will report its second-quarter earnings on Wednesday and analysts expect it to be a mixed bag this time around.

The revenues are expected to be very strong because volume growth was healthy this time, however, the margins could be under pressure because their product mix has weaken as they sold higher number of low margin products like the CT100 because of the discounts that were given there.

Overall, a revenue growth of 22 percent is what the street is estimating, a little over Rs 8,000 crore, the EBITDA could go up by about 6.8 percent but the margins could fall by more than 250 bps coming in at 17.2 percent versus 19.7 percent same time last year. The profit growth could be limited to just about 3.3 percent.

The street is factoring in weaker demand in the second half of the year because of a whole host of issues such as higher insurance cost, higher fuel prices and in general, the festive demand has been pretty weak.

Bookings have fallen by 15-20 percent but this quarter particularly, the reasons for the margin decline could be – one is they have given a higher amount of discounts in the economy motorcycle segment which is the CT100 particularly and two is higher commodity costs which have not been passed on entirely in the form of price hikes and a weaker product mix, they sold higher number of low margin products. So all of that put together could drag the overall numbers quite a bit.

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