Bajaj Auto Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Bajaj Auto Limited (BAJAJAUTO) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:23:06] Amyn Pirani of JPMorgan asked about other operating income being strong despite export volumes being lower. Dinesh Thapar CFO answered that the benefit is coming from export incentives. But the way it gets accounted for and it gets realized is slightly different, which can be phased off over time.

• [00:32:33] Pramod Kumar from UBS asked about the normalized other operating income as a percentage of revenues. Dinesh Thapar CFO replied that there isn’t a change in accounting. It is the way it is accounted for. The company added that the realizations have improved compared to the past in subdued market. The second factor is incentives, which is PSI.

• [00:34:26] Pramod Kumar with UBS asked about the 2Q23 export revenue in rupee term. Dinesh Thapar CFO answered that the company’s export revenues were about INR3,800 crores.

• [00:42:16] Jinesh Gandhi of Motilal Oswal asked about export demand recovery, if it’s across markets. Rakesh Sharma ED replied that ASEAN did not experience a downturn, but there was a slight decline in the LatAm sector of about 5% and a 20% decline in Africa. BAJAJAUTO expects demand in Aug. to Dec. period would be better than April to July period.

• [00:44:18] Jinesh Gandhi of Motilal Oswal also enquired about the 3-wheeler ban, both in Egypt as well as African markets. Rakesh Sharma ED said that 3-wheeler ban in Egypt remains. BAJAJAUTO is in talks with the Egyptian govt. and is positive about the outcomes eventually when they happen.

• [00:45:40] Raghunandhan N.L. from Emkay Global asked about EV supply chain and production ramp up and plans for future. Rakesh Sharma ED answered that volumes are ramping up as supply chain visibility is better. The e-auto trials have extended and expects to complete by end of CY22.

• [00:51:27] Raghunandhan N.L. of Emkay Global asked about the capex expectation and the share of capex towards EVs. Dinesh Thapar CFO replied that the capex expectation for the FY23 should be about INR750-odd crores. The much of capex is going on establishing the EV facility for two-wheelers, 3-wheelers and expansion of a new site at Chakan facility for premium motorcycles.

• [00:55:10] Gunjan Prithyani from Bank of America asked about falling market share in India in the domestic business. Rakesh Sharma ED answered the more severe impact on Pulsar market share was due to supply chain disruption. The company upgraded Pulsar and with supply chain improving, the market share in sports segment is approaching 40% levels.

• [00:59:35] Chirag Shah asked about sequential decline in staff cost. Rakesh Sharma ED replied it’s due to increments in last quarter, which is  a one-time cost and the trueup of various performance pay and other payoffs that moved to the current quarter.