As tepid two wheeler sales hurt Bajaj Auto’s profitability, stock slides 4%

• Shares of two wheeler maker Bajaj Auto slipped 4% as investors were disappointed with the company’s falling profitability.
• The company’s net profit slumped 22% year-on-year in the December quarter at ₹1,429 crore.
• Further, the company reportedly sees negative industry growth in the next quarter.

Shares of Pune-based two wheeler maker Bajaj Auto slipped 4% on Thursday as investors were disappointed with the weak financial performance in October to December quarter.

The two wheeler industry is currently reeling under weak demand due lockdown situations and increased cost of vehicles in the last two years. The transition to stricter emission standards, several price hikes by automakers, rising fuel prices and dented purchasing power due to the pandemic has increased the cost of vehicles and impacted the overall demand.

In the December quarter, the company’s net profit slumped 22% year-on-year to ₹1,214 crore.

According to a CNBC-TV18 report, the company is now preparing itself for negative industry growth in Q4 (Jan-Mar).

Net profit per vehicle for the company is down by 20% year-on-year to ₹9,585 crore.

Analysts at ICICIdirect expect the domestic two-wheeler market to revive post FY22 earnings along with domestic three-wheeler sales from a low base on easing of COVID-19 restrictions.
On January 20, shares of Bajaj Auto slipped 4% to ₹3,309.50 as investors were disappointed with the company’s falling profitability.

SEE ALSO: Adani Green Energy stock has jumped 45% this year to become more valuable than L&T, Maruti Suzuki, and Axis Bank
CRED says that all its employees get stock options, expands pool to $500 million