Hero MotoCorp, the country's largest two-wheeler maker beat street estimates and reported a 1.1% growth in net profit to Rs 772.06 crore for the July-September quarter of the current financial year. Analysts had expected the two-wheeler major to post a decline in its net profit, primarily due to the contraction of 7% in sales volume in the period. The company had posted a net profit of Rs 763.37 crore during the same period last year.
The company managed to post positive growth in net profit mainly due to higher realizations per unit due to reduced input costs and internal cost control measures.
The company reported net sales of Rs 6745.11 crore, a contraction of 1.72% Rs 6863.5 crore in the same period last year. Total income also contracted 1.1% from Rs 6915.34 crore to Rs 6837.1 crore in the period. However, ebitda margin improved from 13.52% in the July-September period last year to 15.85 % in the same period this year.
“The quarter saw the beginning of a sales revival and we are cautiously optimistic that this trend will continue in the second half of the fiscal year. The festive season could lead to positive sentiment in the market, which may help maintain the momentum in the coming months,” chairman and chief executive officer Pawan Munjal said.
The company sold 15,74,861 units in the period, against 16,92,523 units sold in the quarter last year, recording a contraction of 6.96%.
The world's biggest two-wheeler maker, in volume terms, has been battling lower volumes in the domestic market on the back of slowing rural economy, which constitutes close to half of its total sales.
Moreover, erstwhile joint venture partner Honda Motocycle and Scooter India's stronghold over the scooter market has been another factor hurting the company. To improve its position in the scooter segment, Hero MotoCorp has brought in two new scooter models, which have completely been developed in house. In the first quarter of the current year, Honda even took over the market leader position in three more states from Hero MotoCorp.