Analysts expect EBITDA margins to contract YoY due to an inferior product mix, where there is higher entry level in both two-wheeler and electric vehicles.Two-wheeler major Bajaj Auto will see high single-digit revenue growth in the third quarter, supported by a marginal rise in volume and average selling prices (ASPs). The quarter saw a recovery in global markets, but the domestic volumes continued to be weak.
Revenue from operations for the October-December 2024 period is seen rising 7% year-on-year (YoY), according to an average estimate of six brokerages. Meanwhile, profit after tax (PAT) is expected to grow around 6% YoY.
Overall volumes during the quarter rose 2% YoY, driven mainly by exports as the African and Latin American markets saw recovery. However, continued weakness in the domestic entry-level two-wheelers led to a 10% drop in domestic volumes.
Analysts expect EBITDA margins to contract YoY due to an inferior product mix, where there is higher entry level in both two-wheeler and electric vehicles.
Here's what to expect from Bajaj Auto's Q3
Axis Securities
We expect total revenues to increase by 7% YoY, led by 2% YoY increase in volumes and mild increase in ASPs on account of a richer product mix — exports growth in 2W/3W and price increases taken during the year being partly offset by lower domestic 2W/3W volumes.
Kotak Equities
Volumes increased 2% YoY in 3QFY25, led by a 21% YoY growth in the export two-wheeler segment, driven by a recovery in African market demand and sustained demand momentum in Latin America, and 33% YoY growth in the export three-wheeler segment, driven by a newer launch of Qute in the Egypt market.
This was partly offset by a 10% YoY decline in the domestic two-wheeler segment, driven by continued weakness in the entry-level segment and inventory correction and a 3% YoY decline in the domestic three-wheeler segment due to a higher base.
“We expect revenues to increase by 7% YoY, led by a 2% YoY increase in volumes and a 5% YoY increase in ASPs, driven by higher PLI benefits, partly offset by weaker mix,” stated Kotak Equities.
Nuvama
Volume growth and better realisation shall support revenue growth YoY. EBITDA margin to contract marginally YoY due to higher discounts and marketing spends. Key thing to watch out is demand outlook in domestic and overseas markets.
Two-wheeler volumes grew 1% YoY as domestic two-wheeler volumes declined 10% YoY. On the other hand, 3W volumes grew 6% YoY. Exports grew 22% YoY, indicating a sustained recovery in the global markets.
We expect the impact of a weaker mix (within domestic and exports plus a lower 3W domestic mix) to impact the EBITDA margin by 40 bp sequentially to 19.8%.
We cut FY26E EPS by 13% to factor in weaker domestic demand, KTM woes and lower margins.
