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Bajaj Auto beats estimates, profit up 10%; but investors not impressed – The Economic Times

MUMBAI: Shares of two-wheeler major Bajaj Auto were witnessing a rangebound session even as the company reported a better-than-expected net profit and margins. The company reported a net profit of Rs 905 crore for the quarter ended December 2013, up 10.5 per cent, as against a net profit of Rs 819 crore in the corresponding quarter of the last fiscal year. ET Now poll estimated it to be at Rs 865 crore. Revenues for the December 2013 quarter grew at Rs 5,131 crore, down 5.2 per cent, as against Rs 5,413 crore in the same period of the last fiscal year. Q3 EBITDA increased to Rs 1,135 crore, up 12.2 per cent, as against Rs 1,012 crore and margins shot up at 22.1 per cent as against 18.7 per cent year on year (YoY). Adjusted margins rose to 21.1 per cent versus 19.8 per cent YoY. According to analysts, the beat on margins front was on the back of exports and rupee depreciation . Exports make up for nearly 40 per cent of total revenues. “We believe Bajaj Auto reported better-than-expected numbers on the back of stronger exports and by containing the costs, in spite of the increasing raw material price scenario. However, we believe that sluggish demand during the festive season, coupled with overall glum market scenario, won’t turn the dwindling domestic two-wheeler market for the time being,” said Dolat Capital Market report. “We believe the domestic two-wheeler market growth would be subdued for the next couple of quarters and the only way for companies to grow would be by increasing the market share , which Bajaj is losing as of now. At current valuations of 14.6xFY15E, we maintain our ‘accumulate’ rating on the stock,” the report added. The stock ended 0.66% up at Rs 1907.90 on the BSE. It touched a high of Rs 1917.90 and a low of Rs 1,894 in today’s trade.
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