Over the past 12 to 15 months, Bajaj Auto's two-wheeler business has experienced a notable resurgence, according to Dinesh Thapar, the Chief Financial Officer (CFO) of the company. In an exclusive interview with CNBC TV-18, Thapar revealed that the business has successfully navigated a challenging period, often referred to as a perfect storm, and is now regaining momentum. Notably, Bajaj Auto has positioned itself as a leader in the competitive 125 cc segment, marking a significant achievement for the automobile major.
During the tumultuous period of 2023, the company faced a setback in its volumes, primarily due to a dip in export demand. March witnessed a substantial 36.5 per cent year-on-year decline in Bajaj Auto's export volumes in the two-wheeler segment, marking the ninth consecutive year-on-year fall. Despite these challenges, the company has managed to weather the storm and is now poised for a robust recovery.
Dinesh Thapar also shed light on the premium segment, emphasising that Bajaj's partnership with Triumph could potentially contribute to doubling the company's premium motorcycle business over the next couple of years. This strategic move reflects Bajaj Auto's commitment to expanding its market presence and catering to diverse consumer preferences.
The positive momentum is further reflected in the stock performance, with Bajaj Auto's stock gaining an impressive 96 per cent in the last year. This places the company as the second-best performer in the Nifty stock index, trailing only Tata Motors. At around 10:30 am, the stock was trading at Rs 7,090, reflecting a 1.5 per cent increase from the previous close on the National Stock Exchange (NSE).
Looking ahead, the outlook for the fiscal year 2024 (FY24) appears promising and exceeds the management's expectations. The company is set to announce its third-quarter results on January 24, providing stakeholders with a comprehensive overview of its financial performance.
Rajiv Bajaj, the Managing Director of Bajaj Auto, expressed optimism about the company's financial position, noting an excellent performance in 2023. He anticipates ending the fiscal year 2024 with a substantial cash reserve of Rs 20,000 crore. Furthermore, Bajaj emphasised the company's commitment to returning value to investors, stating that whenever the company accumulates more than Rs 15,000 crore in cash, it aims to distribute over 70 per cent to shareholders.
To underscore this commitment, the board of Bajaj Auto recently approved a Rs 4,000 crore share buyback at Rs 10,000 apiece. This buyback, at a premium of 43 per cent to the last closing price, is a strategic move to enhance shareholder value. Bajaj Auto plans to repurchase 40 lakh shares through the tender route, representing 1.41 per cent of its outstanding shares. Importantly, the promoters of the company, who currently hold a 54.94 per cent stake, will also actively participate in the buyback.
To facilitate the buyback process, the company's Board has constituted a Buyback Committee, delegating the necessary powers to ensure its smooth execution. This decision reflects Bajaj Auto's proactive approach to optimising its capital structure and enhancing shareholder returns.
