Bajaj Auto announced first-quarter earnings today that symbolized much of the struggle that the two-and-three-wheeler maker has faced in the past few years.
The company's net profit stood at Rs 740 crore, flat when compared year-on-year, on account of rising labour and material costs. Analysts, on average, were expecting net profit of Rs 816 crore,
The company's lackluster financial performance, coupled with a steady loss in the two-wheeler segment has led analysts wondering when and whether the company would recover its lost share.
During the April-July quarter, TVS Motor overtook Bajaj as the country's third-largest two-wheeler maker, behind Hero MotoCorp and Honda India.
But for Bajaj, which has received flak for not launching new products quick enough as well over its decision to not re-enter the reinvigorated scooter space (a market it once dominated), the going may continue to remain tough for the next few quarters before one can look for signs of turnaround.
The company's big focus has been on the commuter bike Discover segment, which has seen its market share come off from 24 percent to 12 percent over the course of 10 quarters.
In an interview to CNBC-TV18, the company's chief financial officer Kevin D'Sa said he was hopeful fortunes of the Discover brand would turn around with the launch of a new 150 cc variant.
But he warned that results from the launch would not be immediate. "I would be very conscious saying that whether the 12 percent will run up immediately back to the earlier 18-20 percent in two quarters, I have my reservations," he said.
Further, D'Sa said that margins for the new Discover would be lower as Bajaj is focusing on adding a lot of features to the motorcycle and would look to price it attractively.
"The intention of the Discover 150 is not just to get the market share but also to get the mindshare of the customers," he said.
Also, while the company's Pulsar has held onto its around 44 percent market share in the premium segment, the segment itself took a severe knock during the economic downturn of the past two years.
But sales of three-wheelers, coupled with strong export growth, have held up for the company, and with exports contributing over 40 percent of its sales, it remains a highly profitable company.
But in line with lukewarm performance domestically, the Bajaj stock has under-performed the broader market, rising about 12 percent this year compared to about 32 percent rise for the benchmark index.
Bajaj Auto stock price
On July 17, 2014, Bajaj Auto closed at Rs 2091.70, down Rs 48.55, or 2.27 percent. The 52-week high of the share was Rs 2363.90 and the 52-week low was Rs 1683.35.
The company's trailing 12-month (TTM) EPS was at Rs 112.08 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 18.66. The latest book value of the company is Rs 332.04 per share. At current value, the price-to-book value of the company is 6.30.
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