India's second largest motorcycle manufacturer, Bajaj Auto, witnessed a 2 per cent increase in pre-open trading on Thursday. Market places were closed on Wednesday on account of Eid and the next opening showed BSE Sensex up by 0.2 per cent. On the 16th of October, the company had revealed that the net profit rose by 13 per cent to Rs. 837 crore in the July-September quarter. The profit figures of the quarter company went way beyond the estimate given by analysts. According to sources, analysts had projected an average estimate of 11 per cent or a profit of Rs. 819 crore.
The falling economy has worked out in the favour of the firm as weaker rupee has given a boost to export earnings. On the domestic front, Bajaj Auto finds rivals in the form of TVS Motor and Hero MotoCorp. The firm is venturing into international market including parts of Africa and is trying to work out the falling economy on its side. Getting into exports has helped the firm benefit from the exceptional declination of the value of rupee against dollar. Bajaj has already shown a profitable performance in Latin America and Africa and has turned out to be quite a brand in these areas. This is going to help Bajaj make a strong foothold in the international market and would prove highly beneficial in the coming future for its export growth.
Revenue earned through export by the auto major account for one-third of the total sales recorded. The export revenue is said to have risen by 26 per cent in the recent quarter of July to September. As compared to last year, the figures are way higher that the company has recorded this year. "Over the last five years, strategic initiatives taken to enter into difficult markets, like Africa, are yielding rich dividends. The benefits are now enhanced with the depreciating rupee," a source close to the development was quoted as saying.
The company recorded the widest operating margin in the industry i.e. from 23.1 per cent from 18.7 per cent. Bajaj Auto mainly caters to middle class families and youth of the nation who prefer two-wheelers over four-wheelers. Due to the low phase that the automobile industry is going through, none of the firms have been able to raise profitable figures. However, Bajaj Auto has turned out to be an exception and has registered highest sales growth in this financial year that started off this April. Major reason behind low sales was high fuel cost and falling Indian rupee but the coming festive season could spur vehicle demand as Indians consider it an auspicious time to buy a cars or bikes.
