India's Bajaj Auto rises over 7% on profit beat

BENGALURU, Jan 27 (Reuters) - India's Bajaj Auto (BAJA.NS) rose as much as 7.5% on Friday after reporting a bigger-than-expected third-quarter profit on the back of strong domestic demand and price increases.

Stock, which hit its highest level since early September, was the top gainer on the Nifty 50 index (.NSEI) that is down 2%.

The two- and three-wheeler maker's profit increased nearly 23% to 14.91 billion rupees ($183 million) for the quarter that ended Dec. 31 against analysts' expectations of 13.64 billion rupees. read more

The company's revenue from operations increased 3% to 93.15 billion rupees, helped by demand for sports motorbikes during the festive season, when many Indians make big-ticket purchases.

"We expect domestic volumes to grow in double-digits, driven by strong urban demand, better finance availability," Emkay Global analysts said in a note.

Bajaj Auto, known for its Pulsar motorbikes, saw sales volume in the domestic two-wheeler and commercial vehicle market rise 4% year-on-year, however, exports, which made over two-fifths of the total volumes, dropped 33%.

"Exports are likely to be under pressure in the near term, owing to weak macros, adverse currency movements, and USD availability issues in the Africa, South Asia, and Latin America regions," said the Emkay analysts, who have a "hold" rating on the stock.

The company's two-wheeler exports to Africa including Nigeria, Uganda and Democratic Republic of Congo contributed to more than half of its motorcycle exports in the last fiscal year.

Bajaj shares, which rose 11.3% last year, were up 9.1% thus far in January.

Earlier this week, rival TVS Motor (TVSM.NS) also reported a larger-than-expected rise in quarterly profit as it passed on the increase in expenses to customers.

The quarterly earnings reports of two-wheeler makers have thus far come in as a surprise with rural customers still reeling from the impact of high inflation.

($1 = 81.5790 Indian rupees)

Reporting by Ashish Chandra in Bengaluru; Editing by Dhanya Ann Thoppil

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