Bajaj Auto, Hero MotoCorp, Maruti & Tata Motors Share Crashed by 10% today
Bajaj Auto Share noticed a downfall of 10% on Thursday morning. It is the steepest fall ever since March 2020. The warning from the leading makers of two-wheelers and three-wheelers regarding weak festive sales this season has already left the industry with the pressure of high valuation or inflation.
Bajaj and Rival Companies Figured Downfall Trend in this Festive Season
Even though it was previously said that the company would account for at least 8% growth in this upcoming festive season, which also fell below expectations to just 3% to 5%. Along with this, other major players in the two-wheeler segment, such as TVS Motor Company, Hero MotoCorp, and Eicher Motors, also noticed a falling trend of 4.7%, 4%, and 1.3%, respectively.
Bajaj Auto’s sharp decline in stock price reflects concerns about consumer demand. Traditionally, demands are high during this festive season. But this time it could remain sluggish this year. Indians usually make large purchases like motorcycles around the festive period, but this rising inflation, particularly higher food prices, has affected consumer spending power.
Key Factors that Contribute to the Fall:
Weak Product Mix: The company’s product mix is skewed towards lower-margin products, impacting overall profitability.
Muted Festive Season Outlook: A less-than-expected start to the crucial festive season raised concerns about future sales and revenue growth.
Margin Miss: Bajaj Auto’s EBITDA margin expanded by only 40 bps year-on-year, which was below market estimates.
Key Highlights from the Q2 Results:
Domestic Market Share Gain: Bajaj Auto increased its market share in the domestic two-wheeler segment due to strong sales of its motorcycles.
Export Sales Decline: Whether the domestic market noticed growth but international sales declined due to challenges in certain key market trends.
Margin Pressure: The operating margins of the leading two-wheeler maker, came under pressure due to a combination of many factors. This also includes higher input costs and a less-than-optimal product mix.
This downtrend has influenced industries and customers very badly. Abhishek Goenka, the founder and CEO of IFA Global has also commented that Bajaj’s outlook has disappointed investors, who were unhappy with some already underwhelming large-cap earnings.