TVS, Bajaj report record quarterly revenue, see demand momentum continuing

New Delhi: Two of India’s biggest two-wheeler manufacturers painted an upbeat picture of coming demand after reporting record high quarterly revenues in the first quarter on Tuesday.

TVS, the country’s third-largest two-wheeler maker by number of vehicles sold, saw its consolidated revenue grow 34% year-on-year (y-o-y) to ₹16,453 crore even as net profit surged 65% to ₹1,057 crore.

Fourth-largest Bajaj Auto recorded 65% y-o-y growth in revenue to ₹21,688 crore, and 44% increase in net profit to ₹3,188 crore.

Both companies attributed their strong performance to sustained domestic demand following GST cuts and robust export growth, which helped offset higher fuel prices and logistics disruptions caused by the West Asia conflict.

However, TVS flagged risks from an uneven monsoon in its outlook.

“There are challenges on monsoon progression and some elevation in terms of the food and energy prices, but the demand looks very, very strong,” the company’s chief executive K.N. Radhakrishnan said during an earnings call on Tuesday with analysts and investors.

“The domestic demand supported by the GST rationalization and some of the relief coming from income tax (relief) and also affordability is going to help us, and we are pretty confident that you will see July, August, September (maintain the) same momentum,” he added.

“We are happy because it was not an easy quarter,” Rakesh Sharma, joint managing director at Bajaj Auto, said during a post results media call on Tuesday, adding that the company faced inflation, supply chain disruptions, “and very serious logistics issues for international markets”.

Despite the challenges, Bajaj Auto clocked 29% growth in two-wheeler units sold to 1.22 million in the first quarter, with domestic sales increasing 11% to 586,547 units, and international sales rising 52% to 636,005 units.

Domestic two wheeler sales for TVS Motor Company grew 27% to 1.42 million units, while international sales rose 33% to 0.47 million units during the quarter.

Both the companies released their results during market hours. TVS saw its shares surge by 5.7% while Bajaj Auto saw shares drop 0.92% on the National Stock Exchange (NSE). The benchmark Nifty Auto gained 0.93% on Tuesday.

Radhakrishnan said penetration of EVs has increased to 10.6% in the month of June alone.

TVS, the market leader in electric two-wheeler sales, saw EV sales climb 86% to 129,940 units in Q1, compared to 70,060 units in the year-ago quarter.

While Bajaj Auto did not directly reveal its EV sales, Federation of Automobile Dealers Associations data showed that the company recorded 75% growth in sales to 115,406 units in the April-June quarter.

“It has become quite a meaningful contributor to growth as well as profit because we are now enjoying double-digit profitability in the EV business,” Sharma said.

Bajaj Auto is planning to increase capacity by a fourth to more than 9 million units in the next few quarters, including conventional two-wheelers, electric vehicles, as well as three-wheelers in which it is the market leader. Three wheeler sales across domestic and international markets grew 33% to 215,699 units, about 15% of Bajaj’s total vehicle sales.

“All the businesses put together is 7 million units (in capacity), and progressively over the next few quarters we will increase it to over 9 million, almost a 25% expansion in recognition of the strong export demand, the galloping EV demand, and also certain models in three-wheeler ICE where we have faced constraints, and high-end bikes,” Sharma said.

The company is also looking to maintain an export run rate of about 250,000 units, Sharma noted on the outlook ahead.

TVS outlined during its earnings call that it is investing to expand electric two-wheeler capacity from 40,000 a month to 50,000 a month at a time when EV sales are surging.

On the export front, TVS is looking to strengthen operations in the Latin American and Asian markets in a bid to capture more growth.

“We remain focused on strengthening our international footprint through market expansion, product portfolio enhancement, and deeper channel engagement by continuing to capitalize on growth opportunities across emerging export markets,” Radhakrishnan said.

Despite management optimism, analysts have noted that tailwinds for the automobile industry continue but warn that a deficit monsoon could have an impact on two-wheeler sales, with motorcycle sales heavily reliant on rural markets.

“We see fertilizer and seed companies that may lose June quarter revenues if monsoons are delayed, and numbers instead pile up in the next quarter. Tractors, 2-wheelers, FMCG and agri credit are some other industries that could be negatively impacted,” Bernstein analysts Venugopal Garre and Nikhil Arel wrote in a note dated 24 June.