Bajaj Auto Q1 net up one per cent despite export slump

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Bajaj Auto Ltd, India's second-largest motorcycle maker, reported flat net profit for the June quarter, but saw its shares jump as its profit margin weathered a slump in exports of its lucrative commercial vehicles.

Shares in Bajaj turned positive and rose as much as 3.2 per cent after the company said net profit during the quarter rose 1 per cent to Rs 7.18 billion, and that its industry-topping profit margins had risen.

"The market was expecting margins to suffer, but they have stayed intact," said Umesh Karne, industry analyst at Brics Securities in Mumbai.

"Exports are a worry, but the company expects them to improve by the end of the next quarter."

Net sales rose 4 per cent to Rs 47.14 billion. Analysts, on average, had expected profit of Rs 7.91 billion, according to data from Thomson Reuters I/B/E/S.

The company's operating margin for the quarter stood at 19.4 per cent, up from 19.1 per cent a year previously.

Shares in Bajaj, valued at around $7.6 billion, were up 2.8 per cent at 7.28 am GMT in a flat Mumbai market, the benchmark index's biggest percentage gainer. The stock was down as much as 1.4 per cent before the results.

Bajaj, the world's biggest manufacturer of three-wheeled rickshaws used for passenger and goods transportation, said exports of the vehicles fell 41 per cent in the quarter, hit by a tax hike in Sri Lanka and political instability in Egypt.

"Bajaj Auto, along with its distributor, has undertaken pro-active measures like rationalising the end-user cost of vehicles in Sri Lanka," the company said in a statement, adding that it expected sales to return to normal levels by September.

Sales of its motorcycles in India fell 1 per cent during the first quarter of the fiscal year that began in April, against 6 percent growth in the overall market.

Bajaj and its local rivals Hero MotoCorp and TVS Motor are starting to come under pressure from Japanese manufacturers such as Honda Motor Co, as they ramp up activity in the fast-growing market.