Bajaj Auto Q1 FY25 Performance: Strong Growth in Revenues and Profits
Bajaj Auto Q1 FY25 has started the financial year with impressive results, achieving record revenues and operating profits. This strong performance is attributed to a rich product mix and robust sales of spare parts.
Overview of Q1 FY25 Performance
In the first quarter of FY25, Bajaj Auto recorded a 15.7% year-on-year (YoY) growth in net operating revenues. This growth was driven by higher realizations from a rich product mix and record sales of spare parts. The company’s international business volumes also saw a significant increase, indicating a recovery in export markets.
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Domestic Market Insights
The management highlighted that the domestic two-wheeler industry has been improving over the past few quarters. This growth is mainly driven by the over-125cc segment, with popular models such as Pulsar, Dominar, Triumph, and KTM variants continuing to perform well. Additionally, there is sustained demand momentum in the three-wheeler segment due to increased mobility across the country.
Export Market Recovery
Bajaj Auto’s export markets are showing signs of recovery, with double-digit export revenue growth in Q1 FY25. The company witnessed strong momentum in Latin America (LATAM) and improving conditions in Asia, despite challenges in Africa. The reopening of the Egyptian market and the commencement of production at the new Brazil plant further bolstered the company’s export potential.
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New Product Launches
New products continue to be key growth drivers for Bajaj Auto. The company plans to roll out 4-6 new models in the second half of FY25. The recently launched Pulsar NS 400z has been well-received, and in the electric vehicle (EV) segment, the Chetak E-2W saw its volumes double YoY in Q1 FY25. Additionally, the world’s first CNG bike, launched by Bajaj Auto, is gaining traction in the market.
Raw Material Price Impact
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The management indicated that while prices of metals like aluminum and precious metals such as radium, palladium, and rhodium have spiked, steel prices have softened. Therefore, the impact of raw material prices is expected to be neutral in Q2 FY25.
Valuation and Investment Advice
The Bajaj Auto stock has more than doubled from its 52-week low in August 2023, leading to an elevated valuation. Currently, the stock is trading at a valuation of 26.6 times its projected earnings for FY26. Investors are advised to accumulate the stock on corrections for long-term benefits.
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Risks to Watch
Potential risks include weak demand, which could negatively impact financials, and adverse commodity price movements that could increase raw material costs, thereby reducing operating profitability.