Last updated: 29 Oct, 2020 | 11:32 am
Hero MotoCorp, the world's largest two-wheeler manufacturer, reported its financial performance for the July-September 2020 quarter.
Profit: Profit after tax grew 9% year-on-year to ₹ 953 crore, with standalone Profit before Tax soaring 20.4% year-on-year to ₹ 1,249.95 crore. The numbers are at the back of demand recovery aided by improving rural sentiment and strong monsoon combined with rationalization of expenses and extensive cash-preservation measures.
Revenue: Revenue grew 24% year-on-year to ₹ 9,367 crore for the quarter ending September 2020. Revenue growth is attributable to an improving economy and strong product line-up. The table below shows Hero Motocorp’s sales (in units) in the last few months.
EBITDA Margin: EBITDA margins stood at 13.7% as against 14.5% an year ago, and 3.6% a quarter ago.
Investments: Hero MotoCorp increased its shareholding to 34.58% in Ather Energy, making an investment of ₹ 84 crore. Hero MotoCorp has been associated with Ather Energy since latter’s series B funding in 2016.
Harley Davidson Agreement for India: Harley Davidson earlier had ended its wholly owned subsidiary in India, before it made a u-turn to the Indian market, with Hero MotoCorp-Harley Davidson tying up for a sale, service and most important licensing agreement.
As per the deal, Hero MotoCorp will sell and service Harley-Davidson motorcycles in India, also sell parts and accessories and general merchandise, riding gear and apparel through a network of brand-exclusive Harley-Davidson dealers and Hero’s existing dealership network in India.
As part of the licensing agreement, Hero MotoCorp will develop and sell a range of premium motorcycles under the Harley-Davidson brand name. This marks Hero MotoCorp joining brands like Bajaj and TVS, which already have thriving partnerships with foreign motorcycle brands. Harley Davidson, thorough Hero MotoCorp gets to live on in India.
Hero MotoCorp ended Thursday’s trade at ₹ 2,894. With the Harley Davidson deal, it is expected that Hero MotoCorp will have its product lines born from the licensing and new platform access. The performance in the second quarter signals a gradual revival from the negative impact of the pandemic. With demand back to pre-covid levels, resumption of supply chain and logistics, along with judicious price increase , all are set to assist HeroMotoCorp going into the festive season, the same being already evident from 3% increase in market share for the quarter for the company.
Continuing the path of recovery from the zero sales in April, Indian two-wheeler manufacturers have now surpassed pre-Covid level sales in September. Leading the path of rapid recovery, Hero MotoCorp sold more than 7 lakh units, its highest monthly sales in CY2020. The timely arrival of the south-west monsoon, combined benefits of a record Rabi crop, Government support for Agri initiatives and very good progress in the sowing of the Kharif crop have led to positive sentiments in the rural areas, aiding recovery. These factors along with the upcoming festive season are expected to keep the momentum going over the next few months for two-wheelers. Hero Motocorp being the market leader, is well-poised to benefit from this recovery.