Shares of two-wheeler maker Bajaj Auto are among the best performers on the Nifty 50 index so far this year with gains of nearly 20 percent. The stock is also trading at a 52-week high.
However, the company is likely to report a mixed quarter for the January-March period. Revenue may grow in low-single-digits, while net profit may fall. However, EBITDA (earnings before interest, taxes, depreciation, and amortization) margin may expand from last year.
Bajaj Auto's revenue growth is likely to be in the low single-digits dragged lower by weak exports. However, domestic volumes have been strong for the quarter, increasing by 15 percent from last year.
Overall volumes for the fourth quarter though are down by 13.2 percent to 8.48 lakh units from 9.77 lakh units in the same quarter of FY22.
Export markets continue to be hurt by the availability and devaluation of forex in the end markets.
Although the EBITDA margin may rise on a year-on-year basis, it is expected to decline sequentially, due to operating leverage. This decline is despite price hikes and favourable forex.
According to Rakesh Sharma, the Executive Director of Bajaj Auto, the company sales bottomed out in February 2023.
“We have probably touched the bottom in February and we have started to see recovery in March,” he said. Sharma shared this information with CNBC-TV18 in a recent interview, where he also revealed that demand for Bajaj Auto's products is coming back, which is an encouraging sign for the company.
“Demand is coming back,” he said.