India's Bajaj Auto posts Q1 profit jump on commercial vehicle sales; exports drag

BENGALURU, July 25 (Reuters) - Indias Bajaj Auto (BAJA.NS) beat expectations on Tuesday, reporting a nearly 42% increase in first-quarter profit on robust domestic demand for its commercial vehicles even as weak exports continued to drag sales.

Demand pick-up in rural areas and a prolonged wedding season in the country amid some ease in inflation helped automakers log gains during the quarter.

Profit rose to 16.65 billion Indian rupees ($203.45 million) for the quarter ended June 30, compared with analysts expectations of 16.41 billion rupees, according to IBES data from Refinitiv.

Sales of commercial vehicles, which include three-wheeler auto-rickshaws and mini pick-up vans, more than doubled in the domestic market, while two-wheeler sales grew 73%.

This helped the Pulsar motorcycle maker book a total revenue increase of nearly 29% to 103.10 billion rupees.

However, exports of two-wheelers and commercial vehicles fell for a second consecutive quarter by around 34% from a year ago, as persisting macroeconomic headwinds affected its overseas markets.

\“The most stifling factor on our exports business is the strained dollar liquidity across countries,\” Dinesh Thapar, Bajaj Autos chief financial officer, said in a post-earnings call.

\“The macroeconomic challenges that we are seeing - most prominently the scarcity of dollars, raging inflation, and political instability - will create short-term pain,\” Thapar added, talking about overseas markets.

\“Although, in the longer term, it might still play out effectively.\”

The value of foreign sales was diminished by a stronger dollar as the U.S. Federal Reserve embarked on the fastest interest rate hike cycle in four decades to curb red-hot inflation.

Exports had fallen by 41% in the March quarter, dragging profit growth to 2.5% from 10% a year earlier.

In April, U.K.-based Triumph Motorcycles announced it would transfer its distribution operations within India to Bajaj Auto, as overseas motorcycle makers began eyeing Indias premium motorcycle market.

Rival TVS Motors (TVSM.NS) also beat expectations on Monday on strong demand, while Hero MotoCorp (HROM.NS), the worlds largest two-wheeler maker by sales, will report on Aug. 10.

Shares of Bajaj Auto traded about 1% down on Tuesday. The stock climbed about 20.8% in the quarter compared to a 23.7% rise in the Nifty auto index (.NIFTYAUTO).

($1 = 81.8375 Indian rupees)