Bajaj Auto Reports 18% Profit Growth in Q4 FY24, Plans Expansion in Electric Vehicle Market

Key Highlights:
•    Bajaj Auto's profits rose by 18% in the fourth quarter of FY24.
•    The company is focusing on expanding its presence in the electric vehicle market.
•    Despite challenges, Bajaj Auto maintained its profit margins.
•    Chetak electric scooter sales hit a record 40,000 units in the quarter.
•    Bajaj Auto's revenue surged by 30% compared to the same period last year.

Bajaj Auto is confident about its plans for electric vehicles. In their latest conference call discussing the Q4FY24 results, management assured everyone that they're not just dipping their toes into the electric vehicle (EV) market with the Chetak portfolio – they're diving in headfirst! And the best part? The company is planning to keep their margins steady while they do it.

Bajaj Auto's operating margins were 19.7 per cent, up 180 basis points year on year (YoY) in Q4 FY24. According to the company's management, the 180 basis point gain in margins was due to price versus cost dynamics, favorable dollar realization, improved product mix, and operating leverage from greater sales. According to the firm, all three factors contributed to the drag in Chetak.

"We continue to actively manage margins across the portfolio, as we have for the past two years. And we will continue to scale Chetak and grow it competitively while maintaining our current margins," added management.

The company also stated that, despite hurdles like as high lithium ion pricing and early design concerns, it has controlled cost pressures. Furthermore, by selling a record 40,000 Chetak units in the current quarter, they have reduced incremental costs through R&D-driven cost savings, according to the business.

The management stated that although the Production Linked Incentive (PLI) scheme for electric two-wheelers won't result in immediate unit-level profits for the company, it does assist in mitigating some expenses. Bajaj Auto emphasized the need for further efforts in cost reduction and sourcing from more affordable suppliers to narrow the profitability deficit.

According to the management, Bajaj Auto has notably ramped up Chetak's production over the last two years, surging from 3,000 to 12,000-14,000 units per month, thereby fostering a sustainable margin expansion. Concurrently, the enterprise margin witnessed a 400 basis points enhancement to 20 per cent during this period, primarily attributable to the significant scaling up of Chetak.

Also Read: Bajaj Auto's Commercial Vehicle Sales Grew by 17% in March

In Q4FY24, Bajaj Auto reported a consolidated net profit of Rs 2,011.43 crore, representing an 18% rise. The company also declared a revenue of Rs 11,249.8 crore for the January-March quarter of this year, a 30% increase over the Rs 8,660 crore generated during the same period last year.

CMV360 Says

Bajaj Auto's recent financial report reveals a solid 18% profit increase in the last quarter, driven by a surge in sales of their Chetak electric scooters. 

Despite facing challenges, they managed to maintain their profit margins. Their focus on expanding into the electric vehicle market signals a promising future for the company, especially with the impressive growth in revenue, which jumped by 30% compared to last year.