Hero Honda net rises 50%; in festive mood

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New Delhi, Oct 21: Riding high demand, the country’s largest two-wheeler manufacturer—it has over 55% marketshare—Hero Honda Motor Ltd (HHML), registered 49.9% growth in its net profit at Rs 306.30 crore for the second quarter ended September 30, compared with Rs 204.33 crore during the same period last year.

The company’s turnover for the July-September quarter went up by 35.6% at Rs 3,202 crore, against Rs 2,361 crore in the corresponding quarter last year. Its Ebidta margin stood at 13.5% vis-à-vis 12.2% in the first quarter. “The company’s topline as well as bottomline have seen a healthy growth mainly on account of growth in volume and the cost discipline within the company during this fiscal, besides our focus on customers’ need and expansion of our dealer network,” said Pawan Munjal, managing director & CEO, HHML.

Hero Honda’s cumulative sales for the second quarter went up by 28.5% at 9,72,095 units compared with 7,56,494 units in the July-September quarter last year. While the company has set a target of selling 6 lakh units in the current festive season, compared with 5.3 lakh units sold during the corresponding period last year, it feels demand will slow down after the season unless liquidity flows into the system and at lower interest rates.

To meet its target, the company recently launched four new models—the new Passion Pro and the facelifts of the CBZ Xtreme, Splendor NXG and Pleasure—and this would be followed by another launch before the end of this calendar year.

“So far, the two-wheeler industry has grown by 14% and Hero Honda has registered a growth of 20%. However, post-Diwali, the industry will witness a slowdown and growth is expected to come to a single digit, though Hero Honda will hopefully continue to do better than the industry,” says Anil Dua, vice-president, HHML.

According to Munjal, the high interest rates and the lack of big financiers in the market will take its toll on the numbers within a few months. “Going forward, we will have to keep a close watch on the movement of commodity prices and other factors such as inflation, the interest rate scenario and availability of retail finance as these factors will play a crucial role in the industry’s growth in the subsequent quarters,” he says.