A poll conducted among brokers by Moneycontrol has come out that in the third quarter, Bajaj Auto’s net profit may see a decline of 23 per cent on a year-on-year basis and it may remain at Rs 1,195.7 crore. According to the combined findings of the 6 brokerage houses included in this poll, the company’s profits in the December quarter may reflect the impact of weak demand in the festive season.
It is worth noting that today the results of Bajaj Auto are going to come. It has also come out from this poll that in the third quarter, the company’s sales may see a slight growth of 1 percent on a year-on-year basis and it can remain at Rs 8,994 crore. However, during the quarter, the company’s volumes have seen a weakness of 10 percent.
It has also emerged from this poll that almost all the increase in the company’s earnings will be due to the increase in prices. Analysts say that the company’s results in the third quarter will be weak due to weak rural demand as well as fall in exports.
However, it has also been said in this report that despite the weak performance of the two-wheeler segment, the company will get some relief from the strong growth in 3 wheeler sales. Significantly, due to weak demand for two-wheelers coming from the rural market, the company has been adversely affected.
Due to the Corona epidemic, the income of low and middle income group consumers has been affected, due to which the demand for two-wheelers coming from rural areas has decreased. Apart from this, the company has increased the prices of its products due to the recent increase in raw material and commodity prices. This has affected the sales of the company.
Brokerage firm Motilal Oswal says that the company’s stock has been downgraded due to lower volume and higher input cost. It is expected that in the third quarter of the company, the company’s operating profit may see a decline of 23.4 percent year-on-year and it may come to Rs 23.25 crore. Similarly, in the December quarter, the company’s operating margin may see a decline of 480-549 basis points on a year-on-year basis and may remain in the range of 13.9-14.7 percent.
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The impact of rising raw material prices will be seen on the margins of the company. In its preview note of Bajaj Auto, Yes Securities has said that apart from earnings of the company, investors will be watching the company’s guidance on the forward outlook, demand and margins. We believe Bajaj Auto is in a comparatively better position to face pressure on margins due to Haier exports, mix and good cost structure.
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