TVS, Bajaj report record quarterly revenue, see demand momentum continuing
New Delhi: Two of India’s largest two-wheeler manufacturers on Tuesday painted an optimistic outlook on incoming demand after reporting record-high quarterly revenue in the first quarter.
TVS, the country’s third-largest two-wheeler manufacturer by number of vehicles sold, saw its consolidated revenue grow 34% year-on-year. ₹16,453 crore despite net profit increasing by 65% ₹1,057 crore.
Fourth largest Bajaj Auto posts 65% YoY revenue growth ₹21,688 crore and 44% increase in net profit ₹3,188 crore.
Quick answers to important questions
•5 QUESTIONS
TVS posted a 34% year-on-year revenue growth to ₹16,453 billion, while Bajaj Auto posted a 65% year-on-year increase in revenue to ₹21,688 billion.
Both companies attributed their strong performance to sustainable domestic demand, which has defied high fuel prices and logistics challenges, supported by GST cuts and strong export growth.
TVS increased its electric vehicle sales by 86% to 129,940 units, while Bajaj Auto increased its electric vehicle sales by 75% to 115,406 units.
Both companies have faced challenges such as inflation, supply chain disruptions, logistics issues arising from geopolitical conflicts and the potential impact of erratic monsoons on rural demand.
Yes, both companies expressed confidence in maintaining demand momentum in the coming quarters, supported by domestic and international market expansion strategies.
Both companies attributed their strong performance to continued domestic demand. GST cuts and strong export growth helped offset high fuel prices and logistics disruptions caused by conflict in West Asia.
However, TVS flagged risks from erratic monsoon rains in its outlook.
“There are challenges in the progression of the monsoon and some increase in food and energy prices, but demand looks very, very strong,” company CEO KN Radhakrishnan said during the earnings call with analysts and investors on Tuesday.
“Domestic demand supported by GST rationalization and some relief from income tax (rebate) as well as affordability will help us and we are quite confident that you will see (maintain) the same momentum in July, August and September,” he added.
“We are happy that we did not have an easy quarter,” Rakesh Sharma, joint managing director of Bajaj Auto, said at the post-results press conference on Tuesday, adding that the company was facing inflation, supply chain disruptions and very serious logistics challenges for international markets.
Despite the challenges, Bajaj Auto achieved a 29% increase in two-wheeler sales to 1.22 million units in the first quarter; Domestic sales increased by 11% to 586,547 units, and international sales increased by 52% to 636,005 units.
Domestic two-wheeler sales TVS Motor Company rose 27% to 1.42 million units, while international sales rose 33% to 0.47 million units in the quarter.
Both companies announced their results during market hours. On the National Stock Exchange (NSE), shares of TVS rose by 5.7% while shares of Bajaj Auto fell by 0.92%. Benchmark Nifty Auto gained 0.93% on Tuesday.
Electricity is shining
Both companies emphasized that there is strong momentum in electric vehicle (EV) sales, with rising fuel prices and improvement in consumer adoption driving sales.
Radhakrishnan said electric vehicle penetration increased to 10.6% in June alone.
TVS, the market leader in electric two-wheeler sales, saw EV sales rise 86% to 129,940 units in the first quarter compared to 70,060 units in the previous quarter.
While Bajaj Auto did not disclose EV sales directly, data from the Federation of Automobile Dealers Associations showed that the company saw a 75% increase in sales in the April-June quarter to 115,406 units.
“It has made a very meaningful contribution to growth as well as profit as we now enjoy double-digit profitability in the electric vehicle business,” said Sharma.
Capacity expansion
Both companies are aggressively increasing capacity at their production facilities and increasing export targets.
Bajaj Auto plans to increase capacity by a quarter to over 9 million units in the next few quarters, including conventional two-wheelers, electric vehicles and three-wheelers, for which it is the market leader. Three-wheeler sales in the domestic and international markets increased by 33% to 215,699 units; which accounted for around 15% of Bajaj’s total vehicle sales.
“All businesses combined have 7 million units (in capacity) and we will gradually increase it to over 9 million in the next few quarters, an increase of almost 25% considering strong export demand, galloping electric vehicle demand and also some models and high-end bikes in three-wheeler internal combustion engine for which we are facing restrictions,” said Sharma.
Sharma also stated that the company aims to maintain its export volume of approximately 250,000 units.
TVS said in its earnings call that it is investing to increase its electric two-wheeler capacity from 40,000 to 50,000 per month. Electric vehicle sales are increasing.
On the export front, TVS aims to strengthen its operations in Latin American and Asian markets to achieve further growth.
“We continue to focus on strengthening our international footprint through market expansion, product portfolio development and deeper channel engagement, continuing to capitalize on growth opportunities in emerging export markets,” Radhakrishnan said.
Despite the management’s optimism, analysts noted headwinds in the auto industry but warned that a monsoon deficit could impact two-wheeler sales and motorcycle sales may be heavily dependent on rural markets.
“We see that fertilizer and seed companies may lose their June quarter revenues if the monsoons are delayed and instead the numbers may increase in the next quarter. Tractors, 2-wheelers, FMCG and farm credit are some other sectors that may be adversely affected,” wrote Bernstein analysts Venugopal Garre and Nikhil Arel in a note dated June 24.
