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Informist, Tuesday, Aug 13, 2024

 

--Hero MotoCorp: Seeing sharp recovery in mkt share in 125cc segment 

--Hero MotoCorp: To launch new scooter models in next 2 quarters 

--Hero MotoCorp: Optimistic about demand in coming quarters 

--Hero MotoCorp: Apr-Jun EBITDA up 21% on yr at 14.60 bln rupees 
--Hero MotoCorp: Apr-Jun EBITDA margin 14.4%, up from a year ago 
--Hero MotoCorp Apr-Jun revenue 101.44 bln rupees vs 87.67 bln 
--Hero MotoCorp Apr-Jun net profit 11.23 bln rupees vs 8.25 bln 
--Hero MotoCorp Apr-Jun revenue 101.44 bln rupees 
--Analysts saw Hero MotoCorp Apr-Jun net profit 11.84 bln rupees 
--Hero MotoCorp Apr-Jun net profit 11.23 bln rupees 
 

By Darshan Nakhwa

 

MUMBAI – Hero MotoCorp Ltd today reported strong growth in key earnings metrics for the June quarter, driven by higher despatches, richer product mix, higher average selling price, and moderation in commodity prices. However, India's largest two-wheeler maker failed to meet the Street's expectations for the quarter.

 

The company earned a net profit of 11.23 bln rupees in Apr-Jun, up 36.1% from 8.25 bln rupees in the year-ago period. In Apr-Jun of last year, Hero MotoCorp had reported an exceptional cost of 1.60 bln rupees towards a voluntary retirement scheme. Without this one-time cost, the two-wheeler maker's net profit would have been 9.85 bln rupees, which would have resulted in a bottomline expansion of 14% on year in the June quarter, instead of the reported 36.1%.

 

In Apr-Jun, the two-wheeler maker reported healthy growth in its topline, which also outpaced its expenses. The company's revenue from operations rose 15.7% on year to 101.44 bln rupees, driven by 13.5% growth in volumes. Its other income rose 4.3% on year to 2.32 bln rupees. Brokerages had pegged the company's topline at 104.86 bln rupees, and bottomline at 11.84 bln rupees for the quarter. 

 

"We continue to be on the profitable growth journey, crossing 100 bln rupees in revenue for the first time ever, accompanied by the highest ever underlying PAT (profit after tax). As we surge forward, we are investing in long-term capability building to ensure sustained delivery of growth in future," said Niranjan Gupta, chief executive officer of Hero MotoCorp. 

 

In Apr-Jun, Hero MotoCorp's total two-wheeler sales rose 13.5% on year and 10.3% sequentially to 1.54 mln units on account of better urban and rural demand. While the rural demand was driven by the expectation of an above normal monsoon, the urban demand was spurred by the expansion of the premium motorcycle portfolio. While its India sales rose 13% on year, its exports surged 44.4%. Hero MotoCorp sold 1.44 mln motorcycles in Apr-Jun, representing a growth of slightly over 14% on year. Its scooter sales grew nearly 5% on year to 94,200 units during the period. 

 

"We are seeing a sharp recovery in market share in the 125 cc segment charged by the new model Xtreme 125 cc, while we continue to maintain a formidable market share in the entry and deluxe 100/110 cc segment," Gupta said. "Our focus moving forward will be on building our brands in premium segment on the back of launches done in the last few quarters. We will be launching new models of scooters as well in the next two quarters."

 

According to Gupta, the overall economic indicators in India are promising, and the inclusive policies as well as capital allocation to infrastructure and the rural sector announced in the Union Budget for 2024-25 (Apr-Mar) are expected to bolster demand. "With inflationary pressures easing, consumer spending power is set to rise, further driving momentum as we gear up for a big festive season ahead," he said.

 

"Overall, we are optimistic about the demand trajectory for the coming quarters. Our product launches and strategic initiatives are well-aligned to capitalise on this positive market environment, ensuring continued growth and value creation for all our stakeholders," Gupta said.

 

Hero MotoCorp reported a 14.8% on-year increase in its total expenses to 88.82 bln rupees. Cost of raw materials, the biggest expense incurred by the company, rose 9.7% to 66.19 bln rupees. The cost of raw materials consumed as a percentage of revenue from operations during the quarter declined to 65% from 69% in the comparable period. The company's other expenses rose 34.3% on year to 12.09 bln rupees and employee-related costs grew 4.9% to 6.08 bln rupees. Its tax outgo for the quarter was 3.71 bln, compared to 2.70 bln rupees in the year-ago period. 

 

The company's cash operating profit, or earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 21% on year to 14.60 bln rupees. Its EBITDA margin expanded by 60 basis points on year to 14.4% during the quarter, driven by lower commodity costs, richer product mix and higher average selling prices. Brokerages had pegged EBITDA at 15.67 bln rupees and EBITDA margin at 14.7%. 

 

Today, the company's shares closed 1.3% lower at 5,245.50 rupees on the National Stock Exchange. The two-wheeler maker announced its Apr-Jun earnings after market hours.  End

 

Edited by Tanima Banerjee

 

 

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