Bajaj Auto was the biggest gainer among BSE Sensex stocks on Thursday on renewed buying support.
The stock of the two-and-three-wheeler major spurted by 4.42% to Rs 531 on the BSE in afternoon trades. A volume of over 442,000 shares was recorded on the counter till 12:45 IST.
Analysts said the rally on BAL was on renewed buying support due to impressive December 2002 quarter results registered by the company, as well as on expectations of good future prospects. As per market buzz, Life Insurance Corporation of India, General Insurance Corporation and New India Assurance were active buyers of the stock.
Earlier, on Wednesday afternoon, BAL announced its third quarter (ended December 2002) results. The company registered a 24% rise in its net profit to Rs 134.02 crore (Rs 1.34 billion), compared to Rs 108.17 crore (Rs 1.08 billion) in the corresponding period of the previous year. Sales increased by 13.15% to Rs 1,273.46 crore (Rs 12.73 billion), from Rs 1,125.38 crore (Rs 11.25 billion) in December quarter 2001.
The 24% rise in BAL's net profit was in line with a capitalmarket.com poll of auto analysts, which had estimated the net profit to rise by 22.8% to 29.2% to somewhere between Rs 132.80 to Rs 139.7 crore (Rs 1.32 to Rs 1.39 billion).
The company actually registered a net profit of Rs 134.02 crore (Rs 1.34 billion). On the other hand, sales beat projections of somewhere between Rs 1,114.5 crore (Rs 11.14 crore) to Rs 1,143.4 crore (Rs 11.43 billion) for DQ 2002. The company recorded sales of Rs 1,273.46 crore (Rs 12.73 billion), a rise of 13.15%.
Meanwhile, during the December 2002 quarter, the company announced a voluntary retirement scheme for workers at its Akurli plant. This was in addition to to the VRS for its staff announced in the second quarter of the current financial year.
In response to these schemes 1,106 employees opted for the same. The total outgo on these schemes amounted to Rs 46.09 crore. The charge on this account during the DQ 2002 quarter, considered as part of 'Staff Cost', amounted to Rs 19.3 crore, aggregating to a cumulative charge for the nine months of this financial year at Rs 26.85 crore. The balance together with any further sums on this account, if any, will be charged in the last quarter of the current financial year.
Analysts said that BAL's Q3 results were impressive. The company has written off Rs 19.3 crore for VRS, whereas analysts had written off only Rs 7.6 crore in this connection. They said the net profit figure could have been much higher, if the VRS expenses were not written off.
BAL had come out with two voluntary retirement schemes in the current fiscal, of Rs 22.80 crore and Rs 23.40 crore respectively. The company has, till date, written off Rs 34.5 crore of the total sum of Rs 46.09 crore.
For the quarter ended December 2003, BAL's total sales of two-and-three-wheelers rose by 4% to 377,000 units (363,000). Production increased by 8.5% to 396,000 units (365,000).
But this growth of 4% in sales was entirely due to the three-wheeler sales, which registered a growth of 31%. Two-wheeler sales were just marginally higher at 3,26,063 units. Of this, motorcycles registered a 22% growth. The other segments like geared and un-geared scooter and step-thrus continued to witness a fall.
Meanwhile, analysts are bullish on BAL's growth prospects. They said that vehicle sales are usually flat in November and December every year, but expect the company to record good sales in Q4. Going forward, analysts feel that exports of motorcycles and buoyant three-wheeler sales are expected to drive the company's growth.
BAL recorded a 84% jump in exports to 8,114 vehicles in December 2002, from 4,410 units in the same month of the previous year. The company's motorcycle exports year-to-date stood at 32,761 units as against 10,154 bikes in the same period of 2001. The company expects to double its exports in the current fiscal from last year's figure of 44,311.
Quality and cost-competitive motorcycles and 3-wheelers combined with positive economic conditions in select markets resulted in exports more than doubling as compared to year. This has made BAL India's No.1 exporter of motorcycles, 2-wheelers and 3-wheelers.
BAL is also believed to be on the lookout for collaborations with firms in Indonesia for assembling its bikes like Caliber, Boxer and Pulsar there. The company plans to generate 15-20% of its business from the overseas market by 2005. It is also keenly following various African markets for the second phase of its overseas thrust.
Meanwhile, the company is likely to launch its new three-wheeler in the goods segment by the end of this quarter. Analysts feel that three-wheelers may also contribute to the company's growth. BAL holds 92% of the market share in the passenger segment and 16% in the goods segment in the three-wheeler category.
BAL continues to be a market leader in the entry level and performance segment in respect of bikes, with a greater product and marketing focus being brought in the executive segment - which is represented by the Caliber and Croma.
A new 100 cc bike BYK (code named CBM) is slated for a national launch soon. There are expectations that by February 2003, BAL will launch the new bike, which is placed in the executive segment. This product is expected to attract a whole new set of young and first-time buyers of two-wheelers.
The 125 cc World Bike is being jointly developed with Kawasaki. Already, the company has launched the vehicle in Pune and sold 4,000 units. It expects to sell 10,000 units per month after the national launch.
Recently, BAL launched a bike called Boxer AR with a reinforced frame and stronger shock absorbers, targeted at the semi-urban and rural markets.
Meanwhile, the Pulsar continues to dominate the performance and power segment of the motorcycle market. Within a short span of time, Pulsar has achieved a sale of around 15,000 units per month. With the Pulsar now going national, a significant increase in sales is expected. Pulsar has already completed the first 1,00,000 sales within a short period of 12 months.
An average of 17,000 vehicles have been sold every month in the last quarter and the company expects to sell 25,000 vehicles per month by March 2003.
As on 30 September 2002, the promoters' holding in BAL was at 29.2%, while the public and institutions held 31.1% and 22% stake respectively.
BSE Code: 500490
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