Profits Zoom Up For Bajaj Motors!

Published: Thursday, May 19, 2011, 15:21 [IST]

Bajaj Auto Ltd. India's second largest motorcycle and scooter maker by sales reported that its quarterly net profit had more than doubled after sales improved. Bajaj said profits during the had first three months of the year climbed to Rs. 1,400 crores ($310 million) from Rs. 529 crores a year earlier. Analysts had expected Bajaj to report profits of Rs. 649 crores. Bajaj's sales grew 23% to Rs. 4,052 crores from Rs. 3,290 crores.

Bajaj Auto sold 836,671 motorcycles during the first quarter, marking a 17 per cent increase from the corresponding period last year. Commercial vehicle sales increased 16% to 111,527 units. Bajaj has also brought cheer to investors by announcing a dividend of 400 per cent on each share. Bajaj's dividend and the growth in net profit failed to stop the decline of Bajaj auto shares.. In afternoon trade on the Bombay Stock Exchange, Bajaj Auto was down 1.7% at 1,286 rupees, while the benchmark index was off 0.3%.

Bajaj's improved profits are a result of the company paying advanced tax at a discounted rate. Motor cycle sales in India has been boosted by low interest rates, easy availability of loans and the wide variety of models. However, recent interest rate hikes and increasing material costs could reduce motor cycle sales. Bajaj Auto has decided to increase prices in an effort to pass on the increasing material costs to the consumer. Prices of basic commodities such as steel, rubber and copper increased dramatically last year. Bajaj is not expecting prices to increase at that rate this year.

Article Published On: Thursday, May 19, 2011, 15:04 [IST]

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