Hero MotoCorp Ltd.’s profit rose for the second straight quarter beating estimates as demand recovered in the festive sale season on preference for personal mobility during the pandemic.
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Net profit of Hero MotoCorp Ltd. India’s largest two-wheeler maker rose 23% year-on-year to Rs 1,084 crore in the quarter ended December, according to an exchange filing. That compares with the Rs 900-crore estimate of analysts.
The Pawan Munjal-led company’s revenue rose 40% to Rs 9778 crore—its highest ever—against the Rs 9,509 crore forecast.
Earnings before interest, tax, depreciation and amortisation—a key measure of profitability—increased 36% to Rs 1,416 crore.
Ebitda margin stood at 14.5% vs 14.9%.
Niranjan Gupta, the company’s chief financial officer, said they expect input costs to remain under pressure amid rising prices of key commodities and fuel. “The price increase on our range of products that we undertook from Jan. 1 will partially offset these cost pressures,” he said. “We’ll continue to focus on driving cost savings, and take judicious price increases if & when necessary.”
Dispatches of the New Delhi-headquartered motorcycle maker improved in the third quarter as total sales rose 20% over the preceding year to 18.45 lakh units. Sales in the domestic market rose 19% year-on-year to 17.9 lakh units.
The company’s decision to hike prices from January, like other automakers, may have prompted pre-buying in December—a month when consumers usually refrain from purchasing new vehicles as new year’s registration date offers a better resale value.
To be sure, a recovery during the festive season was crucial for India’s automakers that were battling a slowdown even before the pandemic. The lockdown had stalled production, leading to a washout initially. Sales slowly picked up after the nation eased lockdown curbs in June, offering automakers hope to push stocks to dealers.
Hero MotoCorp also recommended an interim dividend of Rs 70 per share, including Rs 5 special dividend, as the company touched the 100-million units milestone.
Shares of Hero MotoCorp rose 1.66% to Rs 3,440 apiece on the BSE on Feb. 4, compared with the benchmark S&P BSE Sensex’s 0.71% rise. The earnings were announced after market hours.