Hero MotoCorp on Wednesday beat street expectations with a net profit of R554.43 crore during the January-March quarter, though on a year-on-year basis it was down 3.5% on the back of higher tax expenses. Analysts had estimated quarterly profits of around R525 crore for the country's largest two-wheeler market leader by volumes.
Net sales for Q4FY14, up 6.31% y-o-y to R6,455.70 crore, were largely in line with analysts' estimates. Unit volumes for Hero MotoCorp had risen 4% in the quarter to 15.89 lakh units.
In the quarter, tax expenses went up almost 68% y-o-y to R187 crore, with tax exemptions enjoyed by the company's Haridwar plant dropping to 30% from 100% in FY14. EBITDA margins for the quarter fell marginally to 13.73%, from 13.83% in the same quarter last year.
For the full year 2013-14, Hero's profits remained largely flat at R2,109 crore, while net sales were up 6.54% at R25,125 crore. Unit volumes for the year rose almost 3% to a record 62.46 lakh units, while EBITDA margins went up to 14.01% from 13.82% in FY13.
Pawan Munjal, MD and CEO said, “The industry continued to witness tepid growth during FY14, although the sentiments did improve in the second half of the year, starting with the festival season in October. In FY15, we have an action-packed year ahead of us with a slew of new products lined up for launch and further expansion of our global footprint.”
He added, “The country has just entered a new era of governance. After three long decades, a single political party has come to power with such a huge majority, and it is clearly a mandate for good governance, development and inclusive growth. With the new government expected to speed up the reforms process and improve the investment climate, we look forward to a revival of the economy and the industry this year.”
Hero, which operates three plants in Gurgaon, Dharuhera and Haridwar, expects to start production at its fourth plant in Neemrana next month.
This will take annual capacity to almost 8 million units, from 6.9 million today.
The company is also expanding sales overseas, and has already formed a joint venture in Bangladesh to set up an assembly plant by FY15, with another in Colombia likely to follow soon for the South American market.
The Hero MotoCorp scrip at the BSE closed 2.08% up at R2,350.30 on Wednesday on expectations of strong growth in Q4FY14 profits. Hero