Hero MotoCorp Q2 Results: Profit Rises 9%, Revenue Up 24% On Sales Rebound
Net profit of India’s largest two-wheeler maker rose 9% year-on-year to Rs 953.45 crore in the July-September quarter of 2020-21.
Hero MotoCorp Ltd.’s quarterly profit and revenue rose as demand for entry-level motorcycles in rural and semi-urban markets recovered after India eased lockdown curbs.
Net profit of India’s largest two-wheeler maker increased 9% year-on-year to Rs 953.45 crore in the three months ended September, according to an exchange filing. That compares with the Rs 964-crore estimate of analysts tracked by Bloomberg.
The Pawan Munjal-led company had seen its net profit nearly wipe out in the previous quarter, hurt by a significant decline in retail sales amid the Covid-19 pandemic.
Hero MotoCorp Q2 Results 2020-21: Key Highlights (YoY)
- Revenue rose 24% to Rs 9,367 crore in the July-September quarter, compared with the Rs 8,756-crore estimate.
- Earnings before interest, tax, depreciation and amortisation—a measure of the company’s profitability—increased 17% to Rs 1,286 crore.
- Ebitda margin stood at 13.7% against 14.5% a year ago
Niranjan Gupta, chief financial officer of Hero MotoCorp, was quoted as saying in a statement that the performance in second quarter signals a gradual revival from the negative impact of the pandemic.
“The recovery in demand to pre-Covid levels, credible resumption of supply chain and logistics, cost & cash management, along with judicious price increase, has helped deliver profitability,” he said.
The New Delhi-headquartered motorcycle maker saw dispatches improve in the second quarter as the nation restarted most activities to revive an economy that’s headed towards a rare annual contraction in more than four decades. The lockdown had forced India’s automakers—grappling with the worst slowdown in more than two decades even before the pandemic—to stall operations, leading to a washout in the initial months.
Auto sales gradually picked up from June. For the quarter ended September, Hero MotoCorp reported a 7% year-on-year rise in volumes at 18,14,683 units.
Yet, financing remains a concern, indicating a complete recovery of the industry is still some time away. Hero MotoCorp’s peer Bajaj Auto Ltd., that reported a decline in net profit and revenue in the reported quarter, said financing is yet to return to pre-Covid levels, and is more forthcoming in premium vehicles compared to commuters.
Automakers, however, are betting on a recovery during the festival season as they pushed inventory to dealers, who aren’t quite sure of a steady revival in demand just yet.
Gupta said based on early estimates the festive sale has started well for the company, and expects the demand momentum seen in Q2 to continue well into the festive season.
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On Wednesday, Hero MotoCorp’s shares rose 0.86% to Rs 2,937.00 apiece on the NSE while the benchmark Nifty 50 ended the day 1.34% lower at 11,729.60 points. The quarterly results were declared after market hours.