Hero MotoCorp shares up 2% as Q2 profit surges 47% to ₹1,054 cr

Shares of Hero MotoCorp, the country’s largest two–wheeler manufacturer surged as much as 1.8% in early trade to hit an intraday high of ₹3,149.95 on Thursday, a day after the company reported a 47% year-on-year increase in profit after tax to ₹1,054 crore in the July to September quarter of FY24. In contrast to this, the company reported a profit of ₹716.07 crore in the September quarter of FY23.

The scrip opened higher at ₹3,149.95 crore as against the previous closing price of ₹3,092.05. At 9:57 AM, the company’s stock price, however, declined by 0.51% to ₹3,076.30. In the first hour of the trading session on Thursday, the company’s market capitalisation stood at ₹61,439.69 crore, with 7,559 crore shares exchanging hands as against the two-week average of 0.22 lakh shares.

During the quarter under review, the company’s revenue from operations grew by 4.1% to ₹9,445 crore as against ₹9,075 crore in the same period last year. The EBITDA (earnings before interest, tax, depreciation and amortisation) margins of the country’s largest two-wheeler manufacturer improved by 260 basis points to 14.1% year-on-year as against 11.4% in Q2 of FY23 aided by commodity cost, leap savings and product mix. The company’s EBITDA grew by 27.9% at ₹1,328.3 crore in the September quarter, as against ₹1,038 crore in the same period last year.

"Supported by its relatively stronger macro‐economic fundamentals, India has continued to outperform most of the large global economies. A healthy festive demand across most categories and specifically in the auto sector has demonstrated the underlying propensity of the robustness of the market. The consumer confidence is coming back, which augurs well for the growth momentum moving forward," says Niranjan Gupta, CEO, Hero MotoCorp.

"Our results for the second quarter as well as the first half of the fiscal reflect our continued financial discipline and prudent capital allocation even as we ensure the premiumisation of our portfolio. The premium range of products which have been launched across all key models have been received by the customers very well. Our strong margin shape will help us even more in deploying necessary fuel behind growth priorities," he adds.

During the quarter under review, the company sold 14.16 lakh units of motorcycles and scooters.

Notably, Pawan Munjal, the company's Executive Director has decided to take a 20% salary cut with effect from January 1, 2024. "Earlier this year, Dr. Pawan Munjal decided to separate the roles of the Chairman & CEO and appoint a CEO for the Company. Following this transition, he has now volunteered to reduce his fixed salary by 20%. The same was approved by the Board of Directors at its meeting today following the recommendations of the Nomination & Remuneration Committee. The updated remuneration of the Executive Chairman will be effective 1st January 2024," says the company.