India’s largest two-wheeler manufacturer Hero MotoCorp is expected to report a 33.6 percent on-year decline in net profit to Rs 574.6 crore for the quarter ended March, according to an average of seven brokerages polled by Moneycontrol.
The decline in net profit is likely to stem from a weak topline performance and a slump in profitability for the company in the face of a slack in demand, semi-conductor shortage and high raw material costs.
Hero MotoCorp’s revenues from operations is likely to slump 11 percent on-year to Rs 7,730 crore in the reporting quarter as volumes plummeted around 24 percent from the year-ago quarter.
The decline in revenue is partially cushioned by price hikes undertaken by the company with brokerage firm ICICI Securities expecting the average selling price to rise 12 percent on-year to Rs 62,000 in the March quarter.
Brokerage firm Axis Securities said that the more than 20 percent decline in volumes for the company would be on account of higher cost of acquiring a two-wheeler in the country and distress in the rural economy.
During the quarter, automobile manufacturers continued to face higher cost for raw materials as global commodity prices surged following Russia’s invasion of Ukraine and the consequent sanctions imposed on their economy.
The impact of higher input costs will be acutely felt on the operating performance with analysts expecting the operating profit to nosedive 25.1 percent on-year to Rs 907 crore in the reporting quarter.
Analysts expect the two-wheeler company’s operating margin to contract 100-316 basis points on-year in the March quarter to 10.8-12.9 percent reflect the damage caused by high inflation and lower demand.
On May 2, shares of Hero MotoCorp ended 1.1 percent lower at Rs 2,480.1 on the National Stock Exchange. The Indian stock market is closed on May 3 on account on Eid celebrations. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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