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Informist, Friday, Nov. 15, 2024

 

By Avishek Rakshit

 

KOLKATA - Hero MotoCorp Ltd. is gearing up to create power brands from its current brand portfolio while expanding the product range that will help it grow the business amid projections of good demand conditions, Chief Executive Officer Niranjan Gupta said Friday. Power brands refer to those brands that contribute to a substantial portion of a company's top line and are recognised as the pillars of growth. Such power brands often house a wide array of products and sub-brands under a mother brand. 

 

Speaking to sector analysts after declaring the company's Jul-Sept earnings Thursday, Gupta said Hero MotoCorp will increase focus on investing in brands that will drive sales. The company is expected to increase its advertising spend to promote particular brands and further the premiumisation drive. At the same time, it will maintain its margins in the 14-16% range, Gupta said. 

 

Gupta said higher sales volume resulting in a healthy financial performance, rising realisations from vehicle sales, projections of good demand for two-wheelers, cost control measures, and other financial factors like receivables for the production-linked incentive scheme give the company the confidence to scale up promotions on some of its brands that will become the growth drivers.

 

While the company will start building its power brands, it will also focus on premiumising the portfolio further and expand network of Premia and Hero 2.0 sales outlets that offer customers a premium buying experience. Gupta said the company's dealerships have been reporting an increase in customer conversion rates from enquiries from these dealerships. 

 

During Jul-Sept, which coincides with the festive season, Hero MotoCorp sold a total of 1.5 million two-wheelers, representing a growth of 7% from a year ago. The sales growth was powered by improvement in rural demand due to the above-normal monsoon and the expectation of strong demand during Ganesh Chaturthi and Onam. It was also on the back of a low base last year when the company had reported weakness in sales of entry-level motorcycles due to sluggish rural demand. The two-wheeler manufacturer sold a total of 1.46 million two-wheelers in India in Jul-Sept, registering a growth of nearly 7% from a year ago, and exported 63,180 units, up 20% on year.

 

Gupta said the government's spending on infrastructure, which generated employment and led to improvement in cash flow in the economy, backed by a strong monsoon will help the two-wheeler industry maintain demand momentum going forward.

 

According to data from the Federation of Automobile Dealers Associations, the automotive industry set a new record during the festive season with nearly 4.3 million vehicles registered during this period--a growth of 11.76% over last year's 3.8 million units. Two-wheeler sales were particularly robust, registering a 13.79% on year growth to reach 3.3 million units.

 

Gupta said that despite cyclones and heavy rains in parts of the country which usually tend to mute consumer demand, enquiries and sales from customers remained strong at its dealerships.

 

Hero MotoCorp is set to launch new vehicles, particularly in the premium two-wheeler, and electric vehicle segments. After launching two models in the electric vehicle segment, the company is set to launch new two-wheeler EVs covering different price points in the next 6-7 months. 

 

Thursday, Hero MotoCorp Jul-Sept earnings beat the Street's projections on its Jul-Sept financial performance by posting its highest-ever quarterly revenue and net profit. The profit after tax surged 14.2% on year to INR 12.04 billion as against the expectation of INR 11.56 billion for the quarter.

 

The revenue from operations rose 10.8% on year to INR 104.63 billion, driven by 7% growth in volumes. Brokerages had projected the company's top line at INR 102.55 billion.

 

The company's Jul-Sept financial performance was driven largely by higher two-wheeler despatches on account of improvement in both domestic sales and exports. The increase in average selling price due to a richer product mix and price hikes during the year also boosted the financial performance.

 

Thursday, Hero MotoCorp's shares closed 2% higher at INR 4,604 on the National Stock Exchange. The two-wheeler maker announced its Jul-Sept earnings after market hours.  End
 

Edited by Vandana Hingorani

 

 

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