Home >Companies >Company Results >In Q1, Hero MotoCorp posts profit of 365 cr

Hero MotoCorp Ltd –country’s leading two-wheeler manufacturer – more than tripled its net profit to Rs 365 crore for the quarter ending June 30, as result of the low base of last year. The company reported a net profit of just 61 crore for the corresponding period last fiscal due to strict nationwide lockdown to tackle the first wave of Covid-19.

On a sequential basis, the company’s performance for the quarter were impacted by the explosive growth in case of Covid-19 from April which led to a lockdown measure being imposed by almost all state governments. The New Delhi -based manufacturer reported a bottom line of 880.94 crore in the fourth quarter of FY 21.

Revenue from operation grew by 84.62% to 5487 crore due to gradual reopening of the economy from the second half of May and the low base of the last year. On a sequential basis, the company’s top-line dropped from 8689.74 crore reported in the fourth quarter of FY 21.

According to analyst estimates compiled by Bloomberg, Hero MotoCorp was expected to report a net profit of 463.70 crore and revenue of 5847.40 crore.

According to Niranjan Gupta, chief financial officer, Hero MotoCorp, the first quarter of this fiscal has been adversely impacted by Covid-19 and despite the challenges posed by the pandemic, Hero achieved significant growth in both earnings and profitability compared to the corresponding quarter of the previous fiscal.

"The company remains optimistic about demand over the coming months with the start of the festive season, and also a healthy monsoon and encouraging farm activity. With last-mile retail opening up further, we expect numbers to be positive as we move forward," said Gupta.

He further added that rising commodity cost has impacted the company and the auto industry overall ut the management has tried to offset the impact through measured price increases and Leap-2 savings program.

Hero’s operating profit or earnings before interest, tax, depreciation and amortization (EBITDA) also rose by 379.62% to 515 crore from just 108 crore reported in the year ago period. The operating margins stood at 9.8% due to steady increase in prices of commodities and sharp decline in sales due to the Covid second wave.

The auto industry came under pressure from the first week of April when Maharashtra began strict lockdown measures. Delhi, Haryana, Karnataka, Tamil Nadu and others followed suit. Hero Moto Corp and other automakers stopped production or reduced output significantly. 

Some like Bajaj Auto Ltd, however, continued to operate with limited capacity to meet export orders. With a steady drop in infections, especially in north and south India, most automakers resumed operations from the middle of May. 

Hero has been witnessing subdued demand for its entry level motorcycles due to increase in prices of products and sharp jump in fuel prices. Hence, dispatches have not picked up substantially as dealers already have substantial inventory.

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