Bajaj Auto Ltd : Bajaj Auto Ltd. The two-wheeler sales of India have suffered a major setback in March. Its sales fell 8 per cent on a monthly basis and 22 per cent on a yearly basis to 2.6 lakh units. In fact, the two-wheeler segment witnessed a slowdown in domestic demand due to severe shortage of semiconductors and saw a massive 41 per cent decline in domestic sales. However, stagnant exports did give some support to the companies.
Expected to increase exports for three years
Moreover, driving a two-wheeler has become costlier due to rising fuel prices. The management of Bajaj Auto said that the demand for motorcycles in India remains sluggish. Analysts at ICICI Securities said in their March 31 report, “With demand stabilizing or declining in key two-wheeler markets, we expect two-wheeler exports to grow at a CAGR of 8 per cent by FY22-FY24 “
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TVS and Hero MotoCorp sales increased on a monthly basis
Certainly, rivals of Bajaj Auto reported a decline in sales in March on a year-on-year basis, though their sales improved on a monthly basis. TVS Motor Co’s sales declined 5 per cent year-on-year, while Hero MotoCorp Ltd. (Hero MotoCorp Ltd) sales declined 22 per cent year-on-year. However, both the companies registered a growth of 10 per cent and 26 per cent in sales on a monthly basis, respectively. However, even during this period, Eicher Motor Ltd. (Eicher Motors Ltd) performed very well. Eicher’s motorcycle sales grew by 2.5 per cent on a year-on-year basis and 14 per cent on a monthly basis.
Prices of two wheelers may increase further
Going forward, the rural market could be the key to the demand for two-wheelers. So far, the demand situation is not the only concern. Margins are likely to be impacted by rising raw material costs such as steel and aluminium.
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According to an ICICI Securities report, “Bajaj Auto will have to increase the price by Rs 9,000/unit for profit per unit due to increase of about 15 per cent in raw material prices.” Analysts at ICICI Securities said the impact of cost hike is expected to be primarily visible in Q1 FY23. In line with this, analysts at ICICI Securities have cut their EBITDA margin forecast for FY23 by 300 basis points to 14.5 per cent.
After falling nearly 6 per cent in the calendar year, the stock of Bajaj Auto has registered a strength of 17 per cent so far in the calendar year 22.