Hero Moto Net Up 19% on Record Sales

Co confident of maintaining tempo despite inflation

OUR BUREAU NEW DELHI

Hero MotoCorp, the country's largest two-wheeler maker, clocked a better-than-expected 19.3% rise in its quarterly net profit driven by record sales, and said it is confident of maintaining the tempo despite concerns over rising inflation and fuel costs. The net profit of the Munjals-controlled company rose to . 604 crore in the three months to September from . 506 crore a year-ago, the Delhibased company said in a statement on Tuesday.
Hero, which donned a new brand identity this quarter after its split with Honda, its partner of 26 years, sold a record 15.44 lakh two-wheelers during the July-September period, a growth of 20% over a year-ago. The festival season, which begins a month-and-a-half before Diwali, boosted sales of Splendor and Passion to a record for the third straight quarter.
Rising inflation and high interest and fuel costs benefit two-wheeler makers as firsttime car buyers hold back their purchases, preferring the cheaper option of a motorcycle or scooter. Two-wheelers sales are expected to grow 12-14% this year, according to the Society of Indian Automobile Manufacturers.
“Our performance improved despite rising food inflation and fuel prices, which are the two major areas of concern for the industry and might adversely impact consumer spending in the coming months,” said Hero MotoCorp managing director and CEO Pawan Munjal.
The company has targeted sales of over six million vehicles in this fiscal, Munjal had said in July. But analysts say Hero sales may slow in the coming months.
“Hero MotoCorp sales may slow down as the company has itself said that inflation and interest rates are a major concern. It may face pressure on sales with disposable incomes getting hurt by these macro economic indices and RBI's upswing in lending rates,” said Mahantesh Sabarad, senior vice-president, research, Fortune Securities.
Hero's net sales jumped 28% to . 5,784 crore from . 4,511 crore a year ago. During the quarter, it reported a record total income at . 5,909.07 crore, up 27.62% from . 4,630.30 crore a year ago. Its operating margins, an indicator of operational profitability, grew to 17.13% from 15.08%. Munjal said sales are expected to remain buoyant during the festival month of October. The company is betting on new launches to grow demand. Hero launched a new 150cc sports bike on Monday.