Two-wheeler maker Hero MotoCorp said on Wednesday its profits rose 9 per cent year-on-year (YoY) for the second quarter ended September 30, riding on better sales.
Sales were boosted by good monsoons leading to better incomes in rural India, as well as new launches during the festival season. The company reported a net profit of Rs 481 crore during the July-September quarter, against Rs 440 crore in the same quarter last year. Total turnover (net sales and other operating income) also grew 10 per cent YoY to Rs 5,726 crore (Rs 5,187 crore), the company said in a statement. Unit sales stood at 14.16 lakh (13.33 lakh).
Earnings before interest, depreciation and amortisation margin for the quarter stood at 14.5 per cent.
Positive sentiments
“These numbers bode well for the festive season. The sentiments are positive and there is a momentum for us in the market. We are definitely looking at demonstrating our leadership by record dispatch and retail sales during the festive period,” said Pawan Munjal, the company’s MD & CEO. The country is passing through a challenging time, reflected in sluggishness in the industry, Munjal said, adding that rupee depreciation, which has impacted several sectors, pushed up input costs of steel, nickel, copper and rubber.
“Going forward, these higher input prices, combined with increasing labour costs, are likely to put a lot of pressure on the margins. We will, therefore, be innovative in tackling these pressures to protect our margins,” he added.
Analysts said the company’s numbers were higher than estimated, adding that the results were led by higher realisation, maintained margins and higher other income.
First-time buyers
“Volumes of Hero MotoCorp have improved during the quarter against industry growth. The product life-cycle is also turning favourable, with seven-eight product actions lined up from the start of the festive season to the first half of 2015,” said Rikesh Parikh, Vice-President - Institution Corporate Broking, Motilal Oswal Securities. “Given the likely dominance of first-time buyers in incremental demand going forward, we see Hero MotoCorp emerging as a leader.
It commands all the relevant attributes that buyers will look for, such as trusted brand, high mileage, economical, and large distribution reach,” said Daljeet Singh Kohli, Head of Research, IndiaNivesh Securities.
The company’s shares ended at Rs 2,087.70 on the BSE, up 0.86 per cent from the previous close.