Hero MotoCorp profit up at Rs 1010 cr; MD and CEO Pawan Munjal says quarter was exciting

By: | Published: November 2, 2017 5:52 AM

In the corresponding period last year, the company reported a profit after tax of Rs 1,004.22 crore.

Hero MotoCorp – the country’s largest two-wheeler manufacturer – on Wednesday reported a 0.62% y-o-y increase in its net profit to Rs 1,010.49 crore for the quarter ended September 30 because of a muted growth in top line and increase in overall expenses. In the corresponding period last year, the company reported a profit after tax of Rs 1,004.22 crore. Total vehicles sold by the company during the quarter increased by 10.9% y-o-y to 20.22 lakh units, but net sales during the quarter increased by just 7.2% y-o-y to Rs 8,361.99 crore. The operating profit, or the EBITDA (earnings before interest, tax, depreciation and amortisation), increased by 9% y-o-y to Rs 1,456 crore. Margins during the period contracted by 20 basis points to 17.4% from 17.6% in the corresponding period a year ago because of higher expenses. Expenses for raw materials increased 9.9% y-o-y to Rs 5,625.83 crore and expenses such as depreciation and amortisation, finance cost and employee benefits grew as well.

According to Pawan Munjal, managing director and CEO, Hero MotoCorp, the first half of the quarter was exciting. The industry rebounded in the festive quarter, largely aided by the positive sentiment in urban and rural markets. “The all-time high sales in the quarter has translated into strong financial growth reflecting the customers’ unwavering preference for our products. This has also set a benchmark in our bottom line. Having surpassed the 75 million unit sales mark, we followed it up with a multiple record performance in quick succession,” said Munjal.

Hero MotoCorp has been the biggest beneficiary of the demand recovery in the rural markets since almost 60% of total sales come from there. Most of the offerings in the economy segment have reported a substantial jump in volumes in the first six months of the fiscal. In the April-September period, Hero’s HF Deluxe volumes increased 33.65% y-o-y to 9,31,046 units while the same for Splendor grew by 5.88% y-o-y to 1,39,478 units. For Passion, volumes increased 2.11% to 5,17,381 units. In the month of September, Hero’s wholesale volumes touched seven million units for the first time. Shares of the company ended down 0.99% at Rs 3,816.45 on the BSE.

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