Good beginning for Triumph Motorcycle, will take 6 months to blossom: Bajaj Auto

Bajaj Auto recently announced its partnership with UK's Triumph Motorcycles to introduce their new range of 400cc motorcycles. On July 5, Bajaj-Triumph unveiled their latest offerings - the Speed 400 and the Scrambler 400 X, two thrilling 400cc bikes.

"The entry of Triumph is very helpful. But I think it will still take about six months to one year for it to fully blossom and make a significant impact on the numbers. It's a good beginning and we are taking it step by step," said Rakesh Sharma, the Executive Director of Bajaj Auto.

Talking about the premiumisation attempts by the company, Sharma said that the 125 cc plus segment in Q1 it has contributed 70 percent or domestic sales and this had some positive implications for both revenue and EBITDA.

"This is shift has been driven by sub segmenting this segment and offering very pointed product propositions over there under our flagship brand of Pulsar. So we're going to continue this in the next three, four months, you will see a few more introductions, new variants in the Pulsar stable, which will be targeted at different sub segments. And we hope that this drive of premiumization not just for Bajaj Auto, but overall in expanding this segment will continue," he added.

Bajaj Auto Ltd reported a solid 42 percent year-on-year (YoY) increase in net profit, reaching Rs 1,665 crore for the first quarter ending June 2023, compared to Rs 1,173 crore in the same period of FY23. The company achieved its highest-ever quarterly EBITDA, reaching Rs 1,954 crore, showing an impressive 51 percent YoY growth.

The margins also saw a significant improvement, standing at 19 percent, with a notable 280 basis points increase. Sharma expressed his satisfaction with maintaining the 19 percent margin and expressed positive expectations for the future.

He highlighted that the Bajaj Auto margin represents a blend of diverse business units. While the company actively manages various inputs and business units to maximize performance, the overall margin is influenced by the mix of these disparate international three-wheelers, domestic motorcycles, and now, the electric vehicles.

Sharma further emphasised that the company is not experiencing significant pressure on input costs. Looking ahead to the second quarter, he mentioned that achieving performance similar to the first quarter would be a great outcome, especially considering the typically subdued nature of the second quarter due to monsoons and the delayed Diwali festival.

However, he remained hopeful about accelerating growth in the premium segments, which, when combined with other positive factors, would lead to maintaining a similar level of margins.

The leading manufacturer of two and three-wheelers manufacturer released in June 2023 witnessed a 2 percent year-on-year decline in total sales volume. The decrease was primarily attributed to lower exports. In June this year, the company sold a total of 3,40,981 vehicles, while it had sold 3,47,004 units in the corresponding month of the previous year. In Q1 the export volumes increased 12 percent sequentially. The domestic retail volumes outpaced export billed volumes once again.

Sharma mentioned that there are still some uncertainties as the entire increase improvement has been driven by Africa, which at a retail level has increased by 14 percent and Latin America has held steady. But South Asia and Middle East thanks to underperformance in Bangladesh and Nepal, has not yet returned.

"We have experienced - I would call it a temporary dislocation, but a large one in ASEAN and Philippines where the government has changed some registration norms. And there is a new process, which is now almost towards the end of adoption. So we hope that that will sort itself out by September latest, and we'll come back to growth. So, therefore, because of these uncertainties, and a few key countries, we are still saying that, let's watch one more quarter. We are optimistic, but the changes are going to be incremental, they're not going to be quantum shift. So yes, quarter two will be probably marginally better than quarter one," he added.