Hero gets a lift from cool bikes, festive spirits

Hero MotoCorp reported a 21% increase in revenue from operations to  ₹9,723.73 crore in Q3FY24, versus  ₹8,030.98 crore in Q3FY23.
Hero MotoCorp reported a 21% increase in revenue from operations to 9,723.73 crore in Q3FY24, versus 8,030.98 crore in Q3FY23.

Summary

  • Hero MotoCorp reported a 51% y-o-y increase in net profit in Q3 and a 21% increase in revenue. The company retailed 1.4 million units during the festive period, its highest ever. It plans to increase production of high-capacity motorcycles and expand its distribution network.

New Delhi: Greater focus on premium products and a strong festive season sent Hero MotoCorp’s profits zipping into high-growth territory in the October-December quarter. India’s largest two-wheeler maker now plans to continue adding muscle to its premium portfolio, and strengthen its parts and accessories business.

“Our recent launches in the premium segment have met with early success, and we are ramping up capacity of our upper premium models. In January, we unveiled two more premium motorcycles—Xtreme 125 R and Mavrick 440. 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," Niranjan Gupta, the company’s chief executive officer, said on Friday while announcing quarterly numbers.

Hero MotoCorp saw a 51% year-on-year jump in its net profit at 1,073 crore in the third quarter, mirroring the lift in profits and volumes seen by listed peers Bajaj Auto & TVS Motor Company. The company also reported a 21% increase in revenue from operations to 9,723.73 crore in Q3FY24, versus 8,030.98 crore in Q3FY23.

The company said it retailed 1.4 million units during the 32-day festive period during the quarter, its highest for any festive period so far.

Hero MotoCorp’s shares settled 2% higher at 4,908 on the BSE on Friday, touching their 52-week high during the day. The earnings released after market hours.

The company is raising production of its high-capacity motorcycles like the Harley Davidson X440, the Mavrick 440 and the Karizma XMR to 10,000 units a month cumulatively, and also working on upgrading its distribution network to a more premium format, Gupta had said in an earlier interview to Mint.

The New Delhi-based two-wheeler maker is investing 600 crore over two years to build a new global parts facility in Andhra Pradesh to fuel its accessories, parts and spares business, which has surpassed 5,000 crore in annualized revenue, it said on Friday in a statement to the exchanges.

It is also expanding its range of electric scooters under the Vida brand—it plans to introduce two new products in the mid and low or affordable price points, and one product in the B2B segment for e-commerce applications over the next 12 months, Gupta had said earlier.

He had also predicted a revival of rural demand to media persons on the sidelines of an event in January. “As we move forward, we do see over the next coming quarters that this segment will be bouncing back and there are green shoots already," he had said.

The company also disclosed that it has spent 160 crore for employees who took up its VRS (voluntary retirement scheme) offer, which was made during the quarter ended June 2023. “The company has introduced a voluntary retirement scheme (VRS) and has provided 159.99 crore for employees who have accepted to be part of VRS, and has disclosed the same as exceptional item in the standalone financial results," it said.

Last month, rivals Bajaj Auto and TVS Motor Co. had reported record-high revenues, profits and operating margins in the quarter ended 31 December, buoyed by robust festive purchases and a revival in rural demand.

Both the original equipment manufacturers (OEMs) saw record profits despite a surge in sales of their electric two-wheelers that typically have low margins.

This points to improving cost structures in the electric segment and an improved domestic mix favouring more premium motorcycles offsetting lower EV margins.

K.N. Radhakrishnan, chief executive officer, TVS Motor Company, had said that rural regions have seen minor improvement and higher growth potential is being observed in urban and semi-urban areas. The company believes that higher aspirational needs of these consumers would lead to better growth from premium segments (>125cc segment). However, Radhakrishnan said he expects the lift in rural sentiment observed during the Diwali season to continue well into the fourth quarter of FY24.

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