Bajaj Auto Cautious On Festive Season Sales; Stock Down by 13%

Shares of Bajaj Auto fell by about 13% on Thursday’s trading session. This comes after the company trimmed its growth outlook for its two-wheeler sales in the ongoing festive season.

The company said that the growth in the two-wheeler industry is likely to dwindle to 5% in fiscal year 2025. Earlier predictions pegged the growth between 5–8%. This development comes following a weak festive demand.

In a conference call, Bajaj Auto executive director Rakesh Sharma said, “We had said that the industry is in the 5–8% zone. I would still say maybe not 8%, but probably closer to 5%.”

He added, “The entry-level market is in decline, and the 125cc+ is showing 5–6% growth. So, overall, it is coming to 1–2% growth right now. That trend is very clear now.”

While reiterating about the performance in Dussehra, Sharma said, “We thought Dussehra would be at 6–8%, but it is not that much. It is 1–2%, almost similar to last year's... I don't think it (growth) will be in the high digits of 8% or so. We will be lucky if we see 3–5% growth for the industry in this festive season.”

Interestingly, the stance maintained by the company contradicts the existing performance of the two-wheelers in the country. Two wheelers witnessed a strong growth following the opening up of the economy since the pandemic.

During Q2 (July–September 2024), dispatched two wheelers went up by 12% to 51,79,349 motorcycles and scooters as against 45,98,442 units a year earlier.

Moreover, two-wheeler sales grew 16.3% YoY to 1,01,64,980 units as compared to 87,39,406 units a year ago.

In the September quarter, Bajaj Auto's sales touched to 10,33,208 units as against 8,81,583 units in the year-ago period. EV sales touched nearly 1 lakh units in the three months ending Sept. 30.

A Mumbai-based analyst told NDTV profit, “That’s something beyond comprehension.” He said, “Bajaj Auto is not correct in its assessment. We are seeing 12–13% growth in the first half of October, and Diwali is yet to come.”

Expressing confusion over the company's stance, a dealer based in Northern India said that sales growth has touched 20% on Year on Year (YoY) basis. The full-year growth may touch at 12%.

A Bajaj Auto’s dealer, based in Mumbai's Chembur area said that volumes have grown by about 20% on a YoY basis during the ongoing festive season. Daily enquiries as well as deliveries have increased following the launch of Bajaj Freedom 125.

Commenting on the growth forecast of the company, Citi Research said, “We are a tad surprised by the outlook on festive demand, wherein management noted that industry volumes are up only 1–2% vs. last year.” In fact, VAHAN data suggests that registrations went up by 12% YoY.

During the post-earnings call on Wednesday, Bajaj Auto’s Chief Financial Officer Dinesh Thapar said we should not jump into the full season’s conclusion now.

“I've seen in the past that, you know… the last two weeks... the final overs... can swing the festive (demand) substantially. So we are waiting for the entire festive (season) to get over and for it to settle and then see how things have happened,” he said.

He added, “I don't think, you know, we'll reach 8–9% growth. I would be surprised (if that happens), but I hope that we should be there at 3–5% growth as an industry.”

Bajaj Auto reported its Q2 results yesterday, in which the company’s net profit surged by 9% to touch ₹2,005 crore.

Shares of the Pune-based firm fell by 12.87 per cent to settle at ₹10,122.30 on the BSE. The stock even fell by 13% to ₹10,071 during the day. On the NSE, the stock slumped to ₹10,093.50 – a 13.11% decline. Shockingly, the company's market cap fell by ₹41,665.54 crore to ₹2,82,672.93 crore.