Bajaj Auto shares were trading 2.96% higher in early trade on Monday, at Rs 3674.85 per share, after the company reported consistent performance in the September quarter (Q2FY23).

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Total operating income climbed 27.5% year on year (YoY) and 27.5% quarter on quarter (QoQ) to Rs 10,203 crore in Q2FY23, mainly to favourable currency movement and an increase in domestic two- and three-wheeler sales.

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Meanwhile, the company’s net profit grew 20% year on year to Rs 1,530 crore, up from Rs 1,275 crore in the previous quarter. Ebitda margins increased to 17% from 16% the previous year. However, the company’s consolidated profit fell 15.6% year on year to Rs 1,719 crore in Q2FY23, compared to Rs 2,040 crore in Q2FY22.

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“The second quarter was outstanding with record-breaking top-line and bottom-line outcomes. As you know, there have been serious macroeconomic issues overseas and also supply chain challenges. That said, we expect Q3 to be better than Q2 with supply chain visibility being much better. The company’s key focus in the months ahead will be volume and market share gains.,” Rakesh Sharma, executive director at Bajaj Auto said.

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“The healthy margins were on account of lower employee expense & other expense, which declined around 130 bps and around 100 bps QoQ, respectively, amidst gross margins decline at 120 bps QoQ vs. our expectation of 15 bps margin expansion,” analysts at ICICI Securities said.

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“We maintain a ‘hold’ rating on Bajaj Auto primarily tracking the slower pace of volume recovery in both domestic and export markets, delay in electric -3-W launch,” brokerage firm ICICI Securities added.

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Over the last five years, the stock price of Bajaj Auto has increased at a CAGR of 1.5% (from Rs 3,300 in October 2017) while underperforming the broader Nifty Auto index.