Performance of companies such as Bajaj Corp and Maruti Suzuki in the March 2018 quarter, especially on the operational front, has been encouraging.
Growth of 8 per cent year-on-year each in net sales and operating profit of Bajaj Corp in Q4FY18 has been in line with analysts’ expectations and was backed by good volume growth (overall 6 per cent) and control over operating costs.
Maruti’s topline growth of 15.4 per cent was led by strong volume growth (including healthy rural demand) and better product mix (higher share of petrol version). However, the company’s operating performance was affected by higher-than expected increase in employee costs and other expenses.
While Bajaj Corp’s management highlighted green-shoots of recovery in rural demand, it does not expect FY19 to see meaningful recovery in sales. However, it said rural sales will outpace urban sales for the third consecutive quarter.
Against this, Maruti sees double-digit volume growth in FY19 compared to high single-digit growth for the industry on strong demand in both rural and urban markets. In FY18, rural volumes increased by 15 per cent and rural market accounted for 36 per cent of Maruti’s domestic volumes.
Good performance along with the optimistic outlook by Maruti bodes well for most other companies in the automobile sector as almost all segments are doing well.