Hero MotoCorp Q1 Results: Profit Falls 58%, Misses Estimates On Covid Hit
Hero MotoCorp's Q1 profit fell missing estimates as sales declined during the second wave of Covid-19.
Hero MotoCorp Ltd.’s quarterly profit fell missing estimates as sales declined amid restrictions to curb the second Covid-19 wave.
Net profit of India’s largest two-wheeler maker tumbled 58% sequentially to Rs 365.4 crore in the quarter ended June, according to an exchange filing. That compares with the Rs 463-crore consensus estimate of analysts tracked by Bloomberg.
The Pawan Munjal-led company’s revenue fell 37% over the preceding three months to Rs 5,487 crore. Analysts expected Rs 5,847.4 crore.
Q1 FY22 Key Highlights (QoQ)
Earnings before interest, tax, depreciation and amortisation fell 57% to Rs 515 crore.
Ebitda margin narrowed to 9.4% from 13.9%.
The New Delhi-based motorcycle maker sold 35% fewer units than in the preceding quarter at 10.24 lakh units in the April-June period. That’s because local lockdowns stalled production and shut dealerships in most parts of the country. Besides, the nation’s hinterland, expected to drive two-wheeler sales buoyed by a good monsoon, bumper crop, increased government spending, was ravaged by the pandemic’s second wave.
"Nearly half of the first quarter FY22 witnessed significant disruptions triggered by localized lockdowns imposed by various state governments and authorities across the country in the wake of escalating coronavirus cases," Hero MotoCorp said in the statement.
High cost of ownership due to costly fuel, a series of price hikes prior to the pandemic and then again to counter the surge in commodity costs, too, weighed on the sales.
Commodity costs continued to rise, and are impacting the industry margins, said Niranjan Gupta, chief financial officer at Hero MotoCorp. The company, he said, remains optimistic about demand over the coming months with the start of the festive season and a healthy monsoon and encouraging farm activity.
Peer Bajaj Auto Ltd., too, saw its profit and revenue drop sequentially in the three months to June.
Shares of Hero MotoCorp ended almost unchanged before the results were announced compared with a 0.5% gain in the benchmark Nifty 50.