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Bajaj Auto picks up 17% in finance arm

New Delhi, Aug. 23: Bajaj Auto, the country’s second-biggest motorcycle maker, has acquired a 17.7 per cent stake in subsidiary Bajaj Auto Finance as part of a restructuring exercise.

Bajaj Auto, which is the industry leader in scooters, and reported a higher-than-expected net profit in the first quarter (April-June) has also divested equity worth Rs 78 crore held in different firms.

The financial restructuring coupled with higher dividend and income from mutual fund units has helped the firm treble its non-operating income.

Non-operating income surged to Rs 102 crore during the period, up from Rs 34.5 crore in the quarter ended June 2002. Net earnings during the first quarter of 2003-04 financial were up 32.2 per cent to Rs 161 crore from a year earlier.

These factors helped shares to rise 12.5 per cent in 2003, outpacing a 10.3 per cent increase in the sensex in the same period, analysts said.

They also forecast the shares for a “higher future growth” as it also has the highest operating profit margin of 18.6 per cent.

Industry leader Hero Honda Motors Ltd and TVS Motor Company Ltd, the number 3 automaker, have margins of 16.1 per cent and 9 per cent respectively

However, the Pune-based company’s sales were flat at Rs 1,208 crore. To drive up revenues, it plans to launch a 125 cc bike with technology partner Kawasaki.

Bajaj also plans to launch an upgraded version of the Pulsar next month.

The company has reported motorcycle sales of 3,07,799 units in the first four months of this financial year against sales of 2,81,343 in the year-ago period.

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