Outstanding Results this week: Bajaj Auto and Dalmia Bharat

As we head into the peak of the Q3FY24 results, every week a few companies surprise the
street with their results. This week saw surprising results from a two-wheeler manufacturer
and a cement company. While these companies have an established presence in their
respective industries, the results demonstrate their ability to sustain growth momentum even
in situations that may not have been very favourable.

Bajaj Auto: Firing on all cylinders

Bajaj Auto is one of the leading two & three-wheeler manufacturers in India. The company is
also the largest exporter of two and three-wheelers in the country. The Q3FY3 results saw
the company post its highest quarterly revenues and net profits in the last two years.

It also reported its highest ever EBITDA margin of 20.1%, up 1% YoY, supported by healthy
volume growth in the domestic market, better realizations and cost control. In the domestic
market, retail sales grew 11% YoY for the industry and the management expects industry
volumes to grow by 8-10% in the coming months.
A strong festive demand was further supported by healthy retail sales in December 2023. A
boost to the sales came from its recently launched mid segment bikes in partnership with
Triumph. The Scrambler 400X sales account for 50% of the total Triumph sales. All of
Triumph’s models put together sold 2,800 units in just 40 cities.
Exports currently are close to 70% of their peak FY22 volumes. However, volume grew by
about 2% sequentially during the quarter. Africa and South Asia exports are yet to pick up as
compared to earlier quarters. Exports distribution stands as Africa at 45-48%, LatAm 25%,
South Asia 15-18%, Middle East and North America at 19%. The company is starting new a
new plant in Brazil wherein production is expected to start by end of Q1FY25.

In the EV two-wheeler space where the competition is hotting up between the legacy two-
wheeler maker and the new entrants, Bajaj Auto has positioned its EV Chetak. It aims to
achieve the 15k units per month sales mark, which will be driven by new launches and
network expansion.
Bajaj Auto is virtually firing on all cylinders with growing domestic sales, strong sales in the
three-wheeler segment, EV models and exports slowly picking up lost momentum. This is
one company that remains a bright spot in the auto sector.

Dalmia Bharat: Cementing a strong foundation in a competitive industry
Dalmia Bharat Ltd. is India’s fourth largest cement company in India, with a capacity of
around 44MT capacity. The Company presently has 14 manufacturing plants, serving
customers across 22 states with a network of 41,000+ dealers and sub dealers.
Commenting on the Q3FY24 results, Puneet Dalmia, Managing Director & CEO Dalmia
Bharat, said, “India has undergone a huge metamorphosis with a lot of reforms in the last
decade. With this, the base for sustainable growth has been set, the momentum is clearly
built and we are now clearly transitioned from a Reform Phase into a fast Growth phase.
Foreseeing this massive growth opportunity, we remain committed to our plan of 110-130
MnT by 2031.”

During FY23, its wholly owned subsidiary DBCL signed a deal to acquire Clinker, Cement
and Power Plants from Jaiprakash Associates Limited having total cement capacity of 9.4
MnT (along with Clinker capacity of 6.7MnT and Thermal Power plants of 280MW) at an
Enterprise Value of Rs 5,836 Crore in the States of Madhya Pradesh, Uttar Pradesh &
Chhattisgarh. According to Puneet Dalmia, clearances should come over the next “couple of
months” with the deal “expected to be consummated by the end of FY24”.

Cement is a critical industry for the growth of infrastructure in the country. Many
consolidations have been seen in this industry post the acquisition of ACC and Ambuja by
the Adani Group. The leading players UltraTech and Adani group have made further
acquisitions of smaller cement companies and are in the race to become the country’s
largest cement manufacturers. In such a background, Dalmia Bharat remains steady,
supported by a good set of numbers in Q3FY24. As its deal with JP Associates nears
closure, this company is expected to stand out in the cement sector as an outperformer.