Hero MotoCorp Ltd. Impulse motorcycles are displayed at a dealership in New Delhi, India (Photographer: Prashanth Vishwanathan/Bloomberg)  

Q3 Results: Hero MotoCorp’s Profit Falls The Most In Nearly Two Years

Hero MotoCorp Ltd.’s profit met estimates even as it fell the most in seven quarters.

Net profit declined 5 percent from the year-ago period to Rs 769.1 crore during the quarter ended December, India’s largest two-wheeler maker said in its exchange filing. That compares with Rs 767 crore consensus estimate of analysts tracked by Bloomberg.

Revenue of the company rose 7.5 percent on a yearly basis to Rs 7,864.82 crore, led by higher sales volume—in line with the Rs 7,751-crore estimate. The company said it sold 17.98 lakh units between October and December, an increase of 5.3 percent from the corresponding quarter last year.

“The domestic two-wheeler industry also has significant headroom to grow, given the penetration of two-wheelers in India is still quite low,” Pawan Munjal, chairman at Hero MotoCorp said.

“There have been temporary setbacks in the third quarter of the current fiscal on account of multiple factors, leading to higher than normal inventory levels at dealerships”.

Munjal, however, expects market situation to improve in the coming months. “Hopefully, the upcoming Budget will have enough impetus for the agriculture and social sectors to trigger a positive turnaround in the sentiments,” he said.

The operational performance also was in line with estimates. Earnings before interest, tax, depreciation and amortisation fell 4.6 percent year-on-year to Rs 1,104.77 crore—the consensus estimate being Rs 1,115 crore. Its operating margin contracted to 14 percent during the period from 15.8 percent—analysts had forecast 14.4 percent.

Shares of Hero MotoCorp ended 0.11 percent higher ahead of the results announcement, compared with a 1.68 percent advance in the NSE Nifty 50 Index.

Also read: Hero MotoCorp Sets Up Research And Development Centre In Germany

Management Highlights From Conference Call

  • Spare parts business rose 5 percent on a yearly basis.
  • The company has 10 percent retail market share in newly launched Destini Motorcycle.
  • March quarter sales expected to be better than December quarter.
  • See pre-buying in 2019-20 which will lead to high single digit growth.
  • Rural demand continues to be muted as of now.
  • Well equipped for transition to BS VI
  • Likely to see tailwinds on weakening commodity prices.
  • Have not any price hike so far in March quarter.