Q2 Results: Hero MotoCorp’s Profit Meets Estimates

Hero MotoCorp Ltd.’s profit for the quarter ended September met estimates even as higher commodity costs hurt margins.

Net profit of the country’s largest two-wheeler maker fell 3.4 percent year-on-year to Rs 976.3 crore in the July-September period, according to its exchange filing. That compares with Rs 944-crore consensus estimate of analysts tracked by Bloomberg.

The company’s revenue, however, rose 8.6 percent on a yearly basis to Rs 9,090.9 crore. That’s against Rs 9,030 crore estimated. Volumes grew 5.5 percent year-on-year to 21.3 lakh units during the three months ended September, led by an uptick in rural markets.

The operating income, or earnings before interest, tax, depreciation and amortisation, fell 5.3 percent on a yearly basis to Rs 1,378.64 crore. That compares with Rs 1,400 crore estimated. Operating margins contracted to 15.2 percent during the period from 17.4 percent. Analysts had estimated margins at 15.5 percent.

The company ceased to get tax exemptions for its Haridwar plant, Chirag Jain, auto analyst at SBICAP Securities Ltd., said. That coupled with higher commodity costs affected their margins, he said.

Ankit Merchant, research analyst, institutional equities, at SMC Global Securities Ltd., said costs went up and other expenses, including marketing and discounts, rose 18.7 percent.

Shares of Hero MotoCorp rose 0.5 percent to Rs 2,895.20 apiece ahead of the earnings announcement. The stock declined 21.8 percent so far this year compared to a 4.1 percent advance in the Sensex, Bloomberg data showed.