Hero MotoCorp Q3 PAT up 51% at Rs 1,073 crore, beats analysts’ estimates

Thanks to easing input costs, operative leverage, higher average selling price, price hikes, and a surge in volumes, Hero MotoCorp registered a 51 percent year-on-year (YoY) jump in standalone net profit to Rs 1,073.38 crore for the quarter ended December 31, 2023. The country’s largest two-wheeler manufacturer’s net profit stood at Rs 711.06 crore during the same period last year.

The New Delhi-based two-wheeler manufacturer’s turnover for the third quarter of this fiscal grew by 21 per cent to Rs  9,723.73 crore.  In Q3FY23, the company clocked a revenue of Rs 8,030.98 crore.

The Q3 FY 24 financials exceeded analysts’ expectations. According to the average estimate of six brokerage firms, Hero MotoCorp was expected to report a 47.39 percent growth in net profit at Rs 1,048 crore. Its revenue from operations was expected to climb 21.1 percent to Rs 9,728 on-year,  as per the same estimates by analysts.

“The government’s emphasis on infrastructure development, while ensuring fiscal prudence in its recent interim budget, has created a conducive business and economic environment, which would facilitate higher growth and job creation. Our recent launches in premium segment have met with early success, and we are ramping up the capacity of our upper premium models,” Niranjan Gupta, Chief Executive Officer (CEO), Hero MotoCorp, said in an official release.

It clocked 47.4 percent growth in quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) to Rs 1,362 crore. On the margin front, EBITDA rose by 2.5 percent or 250 basis points to 14 percent from 11.5 percent in the same period last year “aided by commodity costs, leap savings, premiumisation and judicious price changes”.

The festive season, which usually kicks off in September, was delayed to October-November last year, which further drove up Hero’s total domestic by more than 17 percent to about 1.4 million units in the quarter. The company also benefited from demand for its premium motorcycles, such as the Harley Davidson X440, which it makes under a partnership with the American bikemaker.

In January 2024, it introduced two new bikes, the Xtreme 125R and a special collector’s edition called ‘Hero Forever.’ Additionally, the company unveiled the Maverick 440 at its Centre of Innovation and Technology (CIT) in Jaipur, Rajasthan stating that the new bike will be available in its flagship showrooms soon.

“We will keep fortifying our premium portfolio backed by strong brand building and best in class ‘phygital’ customer experience. Moving forward, our margin shape will allow us to fuel our growth even more,” added Gupta.

The company also declared an interim dividend of Rs. 75 per share and a special dividend of Rs. 25 per share, taking the overall Interim dividend to Rs. 100 per share, commemorating the centennial year of Chairman Emeritus Late Dr. Brijmohan Lall Munjal.

Meanwhile, Hero MotoCorp revealed that its focus on Parts Accessories & Merchandise (PAM) business has led to the business crossing annualised revenue of Rs. 5,000 crore. To support growth in this business, it has planned for an expansion of its capacity with an outlay of Rs. 600 Crore.

At 3:40pm, Hero MotoCorp’s share price was trading at 4,908.50 on BSE, up  2.05 percent from the previous day’s close.

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