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Hero MotoCorp Q2 Results: Profit More Than Doubles As Demand Improves

Net profit of India’s largest two-wheeler maker increased 118% sequentially to Rs 794 crore in the quarter ended September.

A Hero MotoCorp Ltd. Xtreme 200R motorcycle, left, stands on display in Noida,  India. (Photographer: Anindito Mukherjee/Bloomberg)
A Hero MotoCorp Ltd. Xtreme 200R motorcycle, left, stands on display in Noida, India. (Photographer: Anindito Mukherjee/Bloomberg)

Hero MotoCorp Ltd.’s quarterly profit more than doubled beating estimates as demand for its motorcycles bounced back.

Net profit of India’s largest two-wheeler maker increased 118% sequentially to Rs 794 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 690-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

  • Revenue rose 56% to Rs 8,543.4 crore, against the expected Rs 8,037.5 crore.

  • Earnings before interest, tax, depreciation and amortisation rose 125% to Rs 1,156.36 crore.

  • Ebitda margin widened to 13.5% from 9.4%.

The Pawan Munjal-led company sold 40% more vehicles than the preceding quarter at 14.38 lakh units in July-September.

Two-wheeler demand in India, however, has been suffering because of increased cost of vehicles ever since the transition to the stricter Bharat Stage VI emission standards. Higher raw-material prices have prompted at least three price hikes this year alone. Besides, costlier fuel has been hurting sales, especially in smaller cities and towns.

"Hero MotoCorp expects a build‐up in demand over the coming quarters as the economy continues to show recovery and improvement," Niranjan Gupta, chief financial officer of Hero MotoCorp, was quoted as saying in the statement.

He said that positive economic signs, encouraging farm activities and increased need for personal mobility is likely to restart the momentum in the two‐wheeler industry, in rural and semi‐urban markets.

Gupta, however, said commodity prices that have been impacting the industry margins, are showing signs of softening.

Peer Bajaj Auto Ltd.'s second-quarter profit rose, driven by exports and improved domestic demand.

EV Plans In Advanced Stages 

The company said its electric vehicle project is in advanced stages and products will be manufactured at its plant in Chittoor, Andhra Pradesh. "The plant will provide an integrated ecosystem for battery pack manufacturing and testing, vehicle assembly and vehicle end of line testing."

Shares of Hero MotoCorp closed 0.74% lower on Friday before the earnings were announced, compared with a 1.28% gain in the benchmark S&P BSE Sensex. The earnings were announced in post-market hours.