On Thursday, Hero Motocorp – India’s leading two wheeler company, reported a 9% drop in its net profit for the quarter ended September to INR 682 crore. Revenue in the quarter rose by a moderate 7.4% on year to INR 9,158 crores Unlike Bajaj Auto, which saw a Y-o-Y growth in sales volumes, Hero MotoCorp’s vehicle sales in the last quarter dipped by around 1% to 14.28 lakh units.
Higher costs, weak operational performance and moderate sales growth weighed on the overall earnings of the company. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell 2.6% on year to INR 1,038 crore, and operating margin shrunk by 117 basis points to 11.44%. Raw material costs rose more than 7% on year as well as sequentially to INR 6,517 crore.
Commenting the same, Mr Niranjan Gupta, CEO of the company stated –
“A healthy festive period demand across most categories and specifically in auto sector have demonstrated that the underlying propensity to spend has gone up. The consumer confidence is coming back , which augurs well for growth momentum moving forward.
Our Results reflect our continued financial discipline, focus on cost savings and capital allocation on one hand, while ensuring premiumization of our portfolio on the other. The X tec Variants which have been launched across all key models have been received by the customers very well. We will continue to build presence in premium segment through multiple launches over next few quarters. The global macro headwinds may keep the playfield a bit uncertain, and navigating the same over next few quarters will be important. However, as the commodities cool off, and the rate cycle reaches its peak, the medium term outlook for the Indian auto industry appears quite encouraging.“