Hero MotoCorp, the country’s largest two-wheeler manufacturer, on Wednesday missed analysts’ estimates by posting a marginal 0.5% year-on-year (y-o-y) fall in its standalone net profit at Rs909.7 crore during the April-June quarter.
Revenue from operations during the period was also below estimates at Rs 8,809.8 crore, up 10.3% compared with Rs 7,980.5 crore (net of excise) posted in the corresponding quarter last year.
The company’s profit was impacted due to tax benefits coming to an end in Q4FY18 at the manufacturing facility at Haridwar.
The earnings before interest, tax, depreciation, and amortisation (Ebitda) margin at 15.6% was impacted by commodity costs, although offset to a large extent by pricing and continuing cost management. The company’s Ebitda at `1,377 crore was up 6.2% y-o-y, but below estimates.
The company, which makes bikes and scooters like Splendor, Passion, Maestro, and Duet, clocked a volume growth of 14% to 2.1 million as against 1.8 million units in the same quarter last year.
“The Indian economy continues to grow in the face of global headwinds from several fronts. However, the industry has been adversely impacted by the volatility in commodity prices driven by global trends,” Pawan Munjal, chairman and managing director of Hero, said in a statement.
“Despite these challenges, the industry will maintain the growth momentum during the rest of the fiscal, with consumption expected to remain high on the back of a normal monsoon and the upcoming festive season. At Hero MotoCorp, we are geared up to ride the positive momentum with new premium motorcycles and scooters, lined up for launch in the coming months,” he said.
The company’s domestic sales grew 14% y-o-y to 2.06 million units, while exports grew slightly slower at 9% to 46,287 units.
Hero MotoCorp is a beneficiary of the rebound in demand for motorcycles seen over the last few quarters because of rising rural income as almost 50% of the company’s volumes come from rural areas and from bikes which fall in the 95-110cc category. These bikes fall in the low price category.
The company’s market share at the end of June quarter stood at 51%, having sold 1.87 million units, 17% more than in the corresponding quarter last year.
The company’s growth was slower than that of the industry, where volumes grew by 19% to 3.6 million units during
the quarter.
