NEW DELHI Hero MotoCorp, India’s largest two-wheeler company, reported its best-ever quarterly income since it began operations in 1984 as a joint-venture partner with Japan’s Honda (the company was called Hero Honda).
Net profit rose 18% to Rs883.10 crore during the April-June period, compared to the same period last year, supported by a robust growth in the 125 cc category of motorcycles. Overall, gross margins of 16.6% were better – an improvement of 1.7 percentage points – driven by reduction in other expenses.
Revenues during the same period grew by 7.2% to Rs8010.66 crore, compared to the year-ago period. Realisation per unit (scooter or motorcycle) stood at Rs45,270 during the quarter, up 1.6% a year-ago, according to BloomberQuint.
The company also posted its best-ever quarter in terms of volume sales. It sold 6% more than last year. At 17,45,389 of units during the quarter, Hero sold more than thrice the number of two-wheelers America sold in 2015.
“Going ahead, good monsoon is expected to boost motorcycle demand in rural areas and Hero will likely benefit due to its high presence in rural India,” said Arun Agarwal, associate V-P, research, Kotak Securities. “Furthermore, the Seventh Pay Commission payout will provide additional boost to overall two-wheeler demand.”
The company is looking at consolidating its position in the 125 cc category, where it has achieved more than 50% share of the market. It is also trying to enter the premium motorcycle space, which provides two-wheeler makers better margins.
“The sales growth reflected in the positive financial results, and has given us the momentum as we prepare for the festive season,” said Pawan Munjal, CEO and MD, Hero Moto.