Strong sales growth powers Hero MotoCorp Q3 net up 43% YoY

Posted on January 27, 2012. Filed under: Uncategorized |

Hero MotoCorp 's net profit for the third quarter surged 43% year-on-year to Rs 613 crore, helped by strong sales of its two-wheelers. But it cautioned the overall environment remained challenging and will weigh on two-wheeler demand going ahead.

The company, which parted ways with Japan's Honda towards the end of 2010, said revenue rose 17% year-on-year to Rs 6,031.45 crore, its best ever turnover for the quarter.

Analysts on average had expected Hero MotoCorp to report a net profit of Rs 631 crore on revenue of Rs 6,000 crore in the three-month period.

In the year ago quarter, the company had reported an exceptional expense of about Rs 80 crore on claims arising out of litigations.

Meanwhile, Hero MotoCorp's two-wheeler sales in the October-December were also highest ever at 15.89 lakh units, up 11.3%.

“We are well in line to meet our guidance for over six million unit sales in the fiscal 2012,” said MD & CEO Pawan Munjal.

However, he sounded a word of caution on the outlook.

“In FY12 the industry has been facing constraints of rising fuel prices, high interest rates and a sharp rupee depreciation, leading to increased input costs impacting the margin…Therefore, while we expect market demand for two-wheelers to remain stable, a lot will depend on the overall economic and political scenario going forward,” Munjal said.

Hero MotoCorp's EBITDA margin during the quarter was at 15.6%, compared with 15.76% in July-September.

The company, which makes the Splendor and Passion motorcycles and Pleasure scooter, said it is fast enhancing its research and development capabilities, and is currently developing a hybrid technology to make environment-friendly two-wheelers.

It had showcased a hybrid concept scooter 'Leap' at the Delhi auto expo this month.

Hero MotoCorp also said that it is in discussion with international design houses and technology suppliers for collaborating to develop new models.

Earlier on Thursday, Bajaj Auto , India's second largest two-wheeler maker reported a 19% year-on-year rise in third quarter net profit at Rs 795.19 crore, net sales were up 21.6% at Rs 4,839.95 crore.

Hero MotoCorp shares closed up 2.4% at Rs 1,905.10 on NSE on Thursday. Bajaj Auto closed up about 1% at Rs 1,467.75.

Nachiket Kelkar

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