Hero Motocorp Shares Q3 Results

Hero Motocorp

Corporate Action
by 5paisa Research Team Last Updated: 2022-08-08T18:46:27+05:30

The pressure on Hero Moto was two-fold. On the one hand, there was pressure on the top line due to weak demand and tepid rural sales. At the same time, higher input costs and production disruptions meant that the operating profits also took a hit in the quarter. The company did try to stem some of the losses by adopting an efficiency enhancement and cost cutting approach in Q3.

 

Here is a Gist of Hero Motocorp Financial Numbers 3rd Quarter

 

Rs in Crore

Dec-21

Dec-20

YOY

Sep-21

QOQ

Total Income (Rs cr)

₹ 8,013.08

₹ 9,827.05

-18.46%

₹ 8,538.85

-6.16%

Operating Profit (Rs cr)

₹ 808.71

₹ 1,267.94

-36.22%

₹ 912.11

-11.34%

Net Profit (Rs cr)

₹ 703.74

₹ 1,019.18

-30.95%

₹ 745.72

-5.63%

Diluted EPS (Rs)

₹ 35.21

₹ 51.02

 

₹ 37.31

 

Operating Margins

10.09%

12.90%

 

10.68%

 

Net Margins

8.78%

10.37%

 

8.73%

 

 

Let us look at the top line of Hero Motocorp first. For the Dec-21 quarter, the company reported -18.46% fall in sales at Rs.8,013 crore on a consolidated YoY basis. During the December 2021 quarter, Hero Motocorp recorded selling volumes of 12.92 lakh units of motorcycles and scooters combined. This is sharply lower on a YoY basis and the key reason for the same was weak rural demand. On a sequential basis, the revenues were down by -6.06% showing a clear loss of momentum in entry level two-wheeler sales. 

The one redeeming feature of the Hero Moto numbers were the sales of the global business which saw a growth of 16% YoY at 61,000 units. While there was substantial pressure on the overall sales of scooters and motorcycles, the parts business did relatively well with positive growth of 15% in sales at Rs.1,186 crore. During the quarter, Hero Moto deepened its investment in Ather Energy by Rs.150 Cr; taking its total investment in Ather to Rs.655 crore.

Let us not turn to the operating performance of Hero Moto for the third quarter. For the Dec-21 quarter, operating profits were down -18.46% at Rs.809 crore. During this period, the consolidated EBITDA stood at Rs.960 crore while the EBITDA margins came in sharply lower at 12.2%. This was largely responsible for the weak operating performance. However, Hero Moto did try to offset some of these risks by cost cutting and inventory tweaking.

However, the working capital efficiency gains could only partially compensate for the sharp spike in commodity prices in the quarter. The shortage of chips in the market also led to weak production numbers. As a result, the operating margins of Hero Motocorp tapered from 12.90% in Dec-20 quarter to 10.09% in Dec-21 quarter. At the same time, on a sequential basis, operating margins were roughly 59 bps lower on momentum pressures.

Finally, we come to the bottom line of Hero Moto. Clearly, the pressure of operations were visible in the bottom line too as the net profit for the Dec-21 quarter fell sharply by -30.95% YoY at Rs.703.74 crore. The pressure on the operating margins largely got transmitted to the bottom line too. PAT margins tapered from 10.37% in the Dec-20 quarter to 8.78% in Dec-21 quarter. However, PAT margins were higher by 5 bps on a sequential basis on lower base. 


Start Investing in 5 mins*

Get Benefits worth 2100* | Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.


Open Free Demat Account

& get benefits worth 2100*

Resend OTP
Please Enter OTP
  • Have Promo code?
  • Use code ACT2100
Enter Promo code
Account belongs to

By proceeding, you agree to the T&C.

Start Investing Now!

Open Free Demat Account in 5 mins

Enter Valid Mobile Number