Hero MotoCorp: Q3FY14 Result Review

The world's largest two-wheeler company, Hero MotoCorp (Hero) posted its third quarter results today (January 30, 2014). The company registered 7.54% growth in its net profit and 11.14% growth in its revenues on yearly basis during the period under review.

Hero posted revenue of Rs 6877 crore during Q3FY14 against Rs 6188 crore in Q3FY13. The growth in topline was due to good volume growth in two wheelers sold on yearly basis. On the expense front, the company's total expenses grew by 10.54% on yearly basis due to overall growth in its expense heads. Interestingly, the company was able to grow its EBITDA by 15.32% to Rs 899 crore in Q3FY14 on yearly basis. However, the company's net profit increased by just 7.54% to Rs 525 crore in Q3FY14 against Rs 488 crore in Q3FY13 due to 104% higher tax expenses on yearly basis.

On sequential basis, Hero posted 20.09% growth in its total revenue in the said quarter. However, the EBITDA for Q3FY14 grew by just 7.84% over Q2FY14 due to 22.18% higher total expenses on sequential basis. The company's net profit showed 8.98% growth over second quarter of this financial year.

On profitability front, Hero posted expansion of 47 basis points in its EBITDA margins to 13.06% in Q3FY14 on yearly basis. However, there was a contraction of 26 basis points in its PAT margins to 7.63% on yearly basis. The company is facing issue of rising metal costs and currency fluctuation which has in turn dampened its margins.

On operational front, Hero posted 6.85% growth in number of two wheelers sold on yearly basis to 16.8 lacs units. On sequential basis, the company showed a handsome growth of 18.69% over second quarter in this financial year.

Mr. Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp said: 

“We have been able to post solid sales in the quarter in a relatively dull market, and our PAT and total turnover figures are up from the corresponding quarter last year. However, our EBITDA has been affected due to partial recovery of rising metal costs and currency fluctuation. We continue to sustain our market-leadership quarter after quarter with a strong focus on performance and profitability, and going forward, we plan to further strengthen our leadership and demonstrate our prowess in innovation and technology.

While the industry remains under constant pressure due to a number of reasons, we are confident of and committed to deliver value to our stakeholders. For this, we will continue to challenge the existing benchmarks and innovate constantly to pave way for improved performance.

We are excited about the upcoming Auto Expo where we will be showcasing our vision for the future of two-wheelers. Only yesterday, we gave you a glimpse of the range of products that we are developing. But there's more to come -- several more products, including new concepts which you will get to see at the Delhi Motor Show in February.”